PTO 164 | Annual Strategy Session

If there was ONE meeting you should have each year in your business, what would it be? In this episode, Nathan Shields talks about the MOST valuable annual meeting that an owner should have - the Annual Strategy Session. This is the one meeting in which you can step aside from the day-to-day and assess your business as a whole - weak points, strengths, upcoming issues, internal dilemmas, etc. - all at once.

The Annual Strategy Session can invigorate you and your team while coming together to determine what items are essential to achieve our goals this year. It’s a highly valuable meeting and a MUST for clinic owners. Listen to this episode to discover tips on how to have successful annual strategy sessions.


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Coaching Moment: The ONE Meeting You Must Have Each Year

I want to talk about the one meeting that you've got to do every year especially if you have a partner and a leadership team. Even if it's you running solo, the important meeting that you have to have is one of an annual strategy session. The annual strategy session allows you the opportunity, especially with your team, to focus on what's most important over the upcoming new year. Take your heads up out of the muck and the mire of the day-to-day activities that you're performing and focus on the business. Look at the bigger picture. Look at the things that are coming up down the road so you can address them appropriately and in a timely manner so that you're not that you're being proactive and not reactive.

The annual strategy session that I did and most people do, was usually done at the end of the year, looking forward to the next year or at the beginning of the year that they're in, trying to look forward to seeing what they want to accomplish in the upcoming year. The annual strategy session's goal is essentially to get clarity on what are the most important action items that will move your company forward and clarify your goals for the year. It also allows you to recommit to your purpose and values and assess your business from a greater perspective including weak points and potential threats. The beauty behind an annual strategy session is it gets everybody on the same page if there's more than just you. It allows you to focus on the business and what you want to get out of it.

When you're looking at the number of things that you want to do and accomplish over the course of the year, everything can seem like it has high priority. There could be many tasks out there that you're not sure which ones are most important, which ones are most vital to accomplishing what you want to accomplish in your business. It's my recommendation that you do this on an annual basis. You can move your company forward, clarify your goals, reassess your purpose and values. Get a 30,000-foot perspective, reassess business from a greater perspective, including the weak points and the potential threats that are coming up down the road.

One of the recommendations that I have and it's a shameless plug because I offer this as part of my coaching program but it is to utilize a third-party, someone outside of your organization to guide you, challenge you, force you to be clear on what you want to obtain. It will force you to actually put words to the things that you're talking about not just the thoughts that are in your head but words to your concerns or what your goals are. Enforce that clarity to be verbalized.

It's someone you can even be accountable to in the future. It's important in these situations to be most effective, to recognize that there must be a commitment to brutal honesty and recognition of those pink elephants that could be in the room. A lot of you might not have heard of pink elephants before. The pink elephants are the 500-pound gorillas that are sitting in the corner, the sacred cows.

Recommit to your purpose and values and assess your business from a greater perspective yearly. Click To Tweet

A lot of times, especially in a group setting or in a partnership, there could be things that are going unsaid that need to be addressed that are irksome or could be a bone of contention between a partnership or even within a leadership group. The sacred cows are those things where we all believe a certain thing to be true, even though it might not necessarily be that way.

A sacred cow in physical therapy might be something along the lines of we don't treat that way because it's unethical. Maybe it's not unethical but that's just a sacred cow that we've postulated and we need to consider if that's true or not. A 500-pound gorilla could be some serious issues that partners might have between each other and they're just not addressed or haven't been addressed to that point. These are your pink elephants. You need to be brutally honest with each other and amongst the group to recognize that there could be a pink elephant in the room that needs to be addressed.

It's during these annual strategy sessions in which you can address those things if they haven't been addressed to that point. That's a good time to do that to make sure you're all-purpose and value-aligned. Where do you start with an annual strategy session? The first part that I take people through is to envision their ideal scene at the end of the upcoming year. After 3 to 5 years, look and see what you want to accomplish at the end of this year but then also push it forward to see what that looks like 3 to 5 years down the road.

Take that ideal scene and compare it to the current scene. That gives you an understanding of where the gap lies. I want to get to this point but I'm at this point. It helps you understand where you need to get to and where you're starting from. I recommend this be done on both the business and the personal side because more than likely, as an owner at least, your business actions are helping your personal actions and your personal actions, vice versa. It's not something that the personal side of things necessarily needs to be shared if there's a large group of you but it's important to recognize that our personal and our business are significantly intertwined. Starting with the ideal scene working backward, what's our current scene, just to mind of the gap.

Next, reassessment of purpose and values, this is a time to discuss, "Are we living our values and fulfilling our purposes as a business?" This is a perfect time to readdress both the purpose and values as needed and discuss how to better fulfill and exemplify your purpose and values. Sometimes the values can be misconstrued over time. Maybe this is a good time to redefine the values if they're not clear between all the members of the leadership group that's in attendance. Just take some time. It could be a small exercise. It could be longer if these aren't well-stated but it's important to readdress them every year and see how things are going.

PTO 164 | Annual Strategy Session
Annual Strategy Session: Make sure you have measurable goals that can be accomplished within the next year.

The next step is what most people are used to when it comes to an annual strategy session. A lot of people have gone through typical SWOT analysis. SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats. SWOT analysis allows you to address what are your strengths, weaknesses, opportunities that are afforded to us in the upcoming future? What are the threats that we see on the horizon or currently existing internally?

One of the weaknesses of a SWOT is that it doesn't assess past performance. However, that can be noted and addressed in the weaknesses and threats section of your analysis. Properly recognize we didn't do things right in the past year, this is where it lays currently as a weakness or a threat that still currently exists and needs to be addressed going forward.

Most people do a SWOT analysis and that's about where they start. They do this, they take a few minutes to write down the SWOT and put some goals associated with it. If you're doing this right, I should have said it from the forefront, these annual strategy sessions should be done in about a 3 to 6-hour period depending on what you're assessing and the size of your business.

If you're doing it within a single 30-to-60-minute period then that's not enough time to discuss, analyze and assess. In fact, I did an annual strategy session with a client and took us from 10:00 AM up until 8:00 at night and this was a single practice. It takes some time to hone in on what's happening within your business and in order to do that, you have to take the time and set aside the time to do it.

This is a great opportunity if you have a leadership team, to do a getaway, go someplace off-campus, away from family, away from the business or to go to a business center conference center. Stay overnight at a location and have dinner together after the fact. This is a great opportunity to do one of these getaways and to go through this annual strategy session.

Envisioning your ideal scene at the end of the upcoming year helps you understand where you need to get to and where you're starting from. Click To Tweet

Next, after doing the SWOT analysis, it's important to break all of these down, strengths, weaknesses opportunities and then flip those that are weaknesses and threats into opportunities. It's not that you're just taking those and saying, "That's an opportunity." Rather, just reword it. If you were to say, "One of the weaknesses of our organization is that we don't have a completed policy and procedure manual."

How would you flip that? You would flip that by saying, "We have a completed policy and procedure manual. That's one of our strengths and that's an opportunity we could take advantage of." If you wanted to take it further where if one of your strengths was, "We have a great leadership team," you could say, "We have a strong policy and procedure manual that is supported by a strong leadership team." That would be an opportunity to address in the upcoming year.

You take all these opportunities after getting rid of the weaknesses and threats, rewording them to make them opportunities and you break them down and filter those out until you come down to your 4 or 5 top priorities for the upcoming year. Sometimes it takes some discussion and it's important to recognize that this isn't a top priority for the upcoming year or this is a top priority for next year. It's just not a priority for this year. It takes some discussion after going through the whole SWOT, writing up and switching those weaknesses and threats and rewording them into opportunities.

It takes some real discussion amongst the group to get down to 4 or 5 top priorities for the next year. Maybe some that are super important get left off to the side but you have to sit down. You can't do ten. You have to break it down and get to 4 or 5 top priorities for the year. Break it down, filter it down to 4 to 5 top priorities.

Next, set goals for each of those priorities. Goals that would be accomplished preferably in the next year. Each priority gets a goal associated with it. That is measurable. We still have to remember the smart acronym when it comes to these goals but make sure it's measurable and can be accomplished within the next year. Work backward and set quarterly goals for each priority and goal along with some initial action items.

PTO 164 | Annual Strategy Session
Annual Strategy Session: SWOT analysis allows you to address the strengths and weaknesses of your business.

It's important to make sure these goals are measurable but it's also important to then next assign those action items, assign these priorities to members of your leadership team, if you have one. That's the beauty of doing this whole exercise with a leadership team. Some of your leadership team might be aligned with certain priorities or actually within their department are actually responsible for those priorities and the goals to be met. For example, if you have a marketing goal and you have a marketing person, that person is going to be responsible for that goal and that priority for the next year to get that goal accomplished.

That gives them a lot of inspiration but also accountability to achieve that. It's important to do this with other team members if you're able to. It's important to get their insight, the beauty of doing this with a third person to lead it out is that many times members of the leadership team, if they are present might not feel comfortable addressing certain issues. They might feel like they need to deflect to the owner.

Maybe they feel like their voices aren't quite heard or don't want to speak up because that might be counter to what the owner has said in the past. The beauty of having a third person navigate or moderate this annual strategy session is vital because it helps their voices be heard. It addresses the pink elephants that may need to be addressed. It also holds the entire team accountable for equally shared voices.

I'd highly recommend a third-party doing this especially if you have a leadership team involved so that the owner doesn’t have the loudest voice in the room. After getting all this done, we've gone through ideal scenes, we've done the SWOT analysis, we've assessed our purpose and values and we've got goals and action items in place. Everyone's well aligned for this entire next year. We know what we need to do. We know the goals that we want to accomplish. We have metrics in place to measure them. The last thing we need to do is celebrate.

It's time to celebrate what we've accomplished in this session alone. Gather some excitement going forward as a team. Celebrate with dinner, do a team-building activity, you name it. Go do something together to celebrate being a part of this group that we are aligned within shared purpose and values. The one meeting that you need to have each year to focus yourself and achieve the goals that you want to achieve for the next year and more is going to come down to doing the same version of this annual strategy session to put you on the path for success for the next year. That's my coaching moment.

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PTO 163 | PT Partnerships


To succeed, we have to know how to build great relationships. But, how do we do that? Is there a specific process or guideline we can follow? Jeff Sallade PT, DPT talks about successful expansion of business through partnerships. Jeff and his partner have expanded to more than five clinics in the 10 years they've been open, all with a partnership business model that's allowed their PTs to grow into new leadership roles. In this episode Jeff shares with us how they've established each partnership as well as some of the details, considerations, and pros and cons to partnerships in general. This episode is a great follow-up to Eric Miller’s discussion just a few episodes earlier, on what to consider when determining if partnerships are right for you.


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Successful Expansion Via Partnerships With Jeff Sallade, PT, DPT

I've got a PT owner from New Jersey, Jeff Sallade, Coowner of 3 Dimensional Physical Therapy, who has been reading the blog for a while and reached out to me via email saying, “I read your blog about partnerships with Eric Miller, some great insight. We've put it in practice and thought it would be cool to share some of the pros and cons of what we're doing.” Jeff, first of all, thanks for reaching out and thanks for joining me on the show.

Thanks a lot, Nathan, for having me on the show. It's great to be here. I’m a big fan of the show.

I've said this before and I tell readers, “Reach out anytime if you have questions, comments or even recommendations for topics or desks.” Thank you first for taking me up on that. First of all, share a little bit about you so people know where you're coming from and then I can start asking you some questions about your partnerships that you're developing.

I've been in practice as a therapist for years. Similar to many private practice owners, I got to a point where I felt like, “I could probably do this better if I did it myself.” There was another therapist that I knew who we two decided, “Let's do this together.” That was years ago. We had an awesome event in our community. We got a bunch of small businesses out. We had a mechanical bull there. It was awesome. We've had our practice for years. When we first started, we were hoping to get enough patients to be able to take up our time during the day.

We didn't want to be sitting in the clinic, looking at each other. After 1 or 2 years, we had a decent amount of growth but we never gave a lot of thoughts of how we want it to grow. We're an orthopedic and sports clinic, what I think is a pretty typical outpatient clinic. The numbers kept growing. We had hired a couple of therapists. The way that the second clinic came about was we had a sports performance coach that we knew. He was about 20 or 25 minutes away. He said, “A vacancy opened up in my plaza. Would you guys ever have interest in opening up here?” I remember my partner and I looked at each other. I was like, “I don't want to be the one to go there.” He was saying the same thing. We were like, “What do we do if we want to open a second office?”

We had a therapist who had only worked for us for about a year but we liked him. We knew he wanted to do some bigger and better things and have more responsibility. He was from the area pretty close to that opportunity. We said, “Let's give him a chance.” At first, he stepped in as a clinic manager. My partner funded a new clinic. It became apparent that he was going to do a good job once he got in there. That's when we started kicking around the partnership model.

How many clinics do you have?

We have five and then we're opening two more locations. We're in the crazy mode of managing the build-outs and the permits of the two offices. It's a little bit crazy but it's a good crazy.

Congratulations. I assume that you've taken this partnership model that you started but then refined over the years and we've expanded that to the other clinics as well.

Once we allowed Ryan, our first partner, to buy into that second office, my partner Ken and I looked at each other and was like, “Ryan's working there. He's benefiting from having ownership in that office.” We have an outstanding employee who's super motivated because of the financial incentive that he has to do a good job. We said, “Maybe this is a good idea. Maybe our retention rate will be good.” We had another guy that was working for us. He wanted to have his own practice but he didn't want to start it from scratch as we did. We gave him an opportunity. This guy’s name is Chuck. He's a total go-getter. He opened his office a year after that second office was open and he is doing phenomenally as well. My partner and I always own at least 50% of the office and then the partner there has percent ownership as well. It's usually based on their comfort level with how much risk they want to take.

Are you also asking them to put in some money to buy into that clinic?

From the beginning with these two locations that we're opening, we identify the location and then the therapist that works with us that is going to go there. All the costs are split according to the percent ownership. Let's say if a total clinic from start to finish costs $100,000, my partner and I are 50% owners and the other person is 50%, we're each putting up $50,000 whether they know it from the beginning and they know what they need to be responsible for financially. We have found that that works best. They own the clinics in the beginning. They feel like they're an owner right away from the first thing that's purchased.

In this situation, I've got a couple of directions that we can go with this but since we're talking about their percentage of ownership, do you agree to a basic salary for that partner to simply be there? What do you do with distributions after? I don't want to get too detailed if you don't want to but how do you establish the financial relationship? Also, consider that you are doing not only management but also providing backend services. How do you account for that? How do you establish this financial relationship going forward?

The therapists that take over the clinic run the day-to-day stuff and they have guaranteed pay. They have a salary for all the work they do related to their clinic. Most of the time, they've been a staff therapist for a couple of years. Their guaranteed pay usually takes a step back. They’re not a drastic step back. They're not eating peanut butter and jelly every meal of the day but we want them to feel like they're not happy with the guaranteed pay that they're getting because if that would be the only way they would get, they wouldn't be happy with that.

You scale back their salary a little bit because they're going to get more on the backend based on performance.

What we do is we calculate profits monthly. We have a way of setting up a bank account. Each of these offices from an accounting standpoint have own separate LLCs and own separate bank accounts. Everything is separate.

For each LLC, you have your own books as well. They always have their own financial.

My wife used to do our accounting. When we got to five clinics, she said, “I'm tapping out.” We have the guy who does our taxes. He has taken over the month-to-month QuickBooks. They have their own books in each clinic. We know on the first of each month how profitable or unprofitable the clinic was. If there are profits, my partner and I take our distribution. We choose how much we're going to put back into the company and then the partner’s free to do with what they want. Potentially, they get a monthly payout of their profits. You can talk to some of the partners. They're all pretty happy with the setup of their deal.

PTO 163 | PT Partnerships
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How do you set it up? If you're 50/50, have you already predetermined the tiebreaker? Do you have the final vote if you can't come to an agreement on something?

Maybe during COVID, there were some crazy votes that we took but normally, on a day-to-day process, there hasn't been a time. Each partner has an operating agreement and it's defined there. If there are ever big decisions, here's how it works. My partner and I get a vote and then the other partner in the office gets a vote too. That's clearly defined. We haven't had to do anything like that but you got to think of everything before it all happens so that you make sure that when you do run into some things, the rules are clearly defined.

I'm sure you establish this with a lawyer ahead of time to walk you through these scenarios and that's a few thousand dollars that's well-spent in order to establish this stuff. I highly recommend that. Not to get too detailed or into the weeds but have you had to agree on set aside accounts for rainy day funds and stuff like that? How much in a line of credit that you have for each LLC? Do you go that far with each partner to figure out some of those things?

When we were first setting this up, we consulted with a bunch of different private practices. Here's what we came up with. Each office has a bank account. In one of the accounts like our checking account that we pay all the bills from, there's a certain threshold that always has to be there. It's like 3 or maybe 2 months of expenses. We know that we can't go below that. There's a buffer built in there. Every once in a while, when payroll falls at the beginning of a month and rent hits, it goes below that but by the end of the month, it has to be back at that threshold.

At the end of the month, if it's not at that threshold then we know that the clinic wasn't profitable that month and everybody has to do an equity call. If it is profitable, everybody gets to take distributions. There are good and bad with being a partner. That's one of the cons. The partner has to get in the mindset of, “If I'm not profitable by X amount of money, I'm responsible for doing an equity call and contributing money back to the office.”

There's a difference between hard equity and soft equity, where soft equity might be you're going to get some bonuses, some profit-sharing model or something like that but hard equity being their name is on the legal paperwork for the LLC. Is that how you've established it? Are these hard equity partners?

Yes. They're on all the paperwork. We have a couple of clinics where there's a partner. For instance, the clinic that I work and treat in, we have a clinic manager. He doesn't have ownership in the office but he has a profitability incentive. He has less risk. If there's a month where we're not profitable, he isn't putting money back up. He hasn't been penalized for that. He isn't getting paid out an incentive for the month. We've done that model as well. People who are as willing to take the jump into ownership. We have another account. We have savings account for each LLC or clinic. Five percent of the profits go into the savings account before anything gets paid out.

To set aside for rainy days or taxes.

If there’s a big piece of equipment somebody wants to buy like a BFR and all the clinics have BFR units, they can use that money to purchase it. We learned during COVID. that we didn't have enough money in our savings account. We make sure that we're not spending that money as readily to have anything that the clinic would want to use.

I'm assuming that you've already established an umbrella company that charges each clinic to do the billing, payroll, accounting and legal services. There's a number of things that the umbrella company has. Do you have something like that in place as well?

Communicate with all the partners on a regular basis one-on-one. Click To Tweet

We do our billing in-house, billing authorization. We have 6 or 7 employees that do that. We have a marketing employee and an operations employee. There are certain positions that don't generate revenue that is central to the company. Each office contributes to that. The way that we determine that is by the percent of collections. If we have $100 in collections in a month and one office does $20 of collections, they're paying 20% of the expenses. We call them management expenses.

That's one way to do it the way we did it. Maybe it's similar to yours but we simply charged a flat percentage and we called it the management fee. Based on what I've talked to other PT owners and also other industries that sometimes land between 15% to 20% of collections that will go towards the management fee to cover those types of expenses whether it's marketing payroll, billing and collections, do you think that number sounds about right based on where your collection is at?

The percent collections pay for the salaries of the employees and then there are some other expenses that are sent. We charge a flat percentage to the clinics to account for those things. Those are our expenses for the EMR system and liability insurance. All that stuff falls under a flat percentage. If it benefits all the offices, we pay for that centrally.

Is the lease held by each separate entity for each location?

Each location leases under each of the individual entities.

This partner would still be on the hook for the lease as well.

PTO 163 | PT Partnerships
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We had a lease where we had all of our billing and insurance employees at a separate location. That was all paid for by all the offices individually. They each contributed. What happened was after COVID, everybody worked from home and after that, nobody wanted to come back to the office. We had this sweet office that nobody was going to work in. Each still pays the least. It was a management facility so each office had to contribute a certain percentage to make up for the fact that we were getting out of that week. Everybody's much happier working from home. They do a much better job working from home too. Going forward, we have less expense. One last lead to worry about.

To add these additional locations with separate LLCs, do you have to go through the full credentialing process or do you have relationships with your insurance companies where like, “We're adding another location. It's a separate LLC?” What's that process like?

It's automatic. The person who does our operations knows all the steps to follow. It's like hiring another physical therapist who has credentials. With these two offices that are in the process of being open, she's already on top of the credentialing for those offices. It happens pretty quickly.

It's a whole new process. If you stay under one LLC, you say, “I'm going to add another location.” It's a full-blown credentialing process again.

Each LLC has their own tax ID number but we do all of our billing under that umbrella company. Everything falls under that tax ID so that credentialing is easier.

I see where you're going. The tax ID number of the umbrella company is the one that's adding a location.

This might be good to cover. A question that we get from partners is, “How do I know that the money that my clinic is producing is being distributed to my office if all the money is coming into the central location?” We've made sure that our billing software is able to account any collection that happens at clinic X, Y or Z gets credited to clinic X, Y or Z. Every week, we move money around from our central bank account out to the individual clinics so that every week, they're getting their collections into their bank account.

Your bookkeeper's got to be almost full-time on this stuff.

They're getting more and more hours. We've become known as this biggest headache.

To expand like this, there seem to be two things that are necessary and there could be more but I'm talking off the top of my head. Number one, you've got to have a partner that's in alignment with you, someone that you've known. Not just some PT that you hired off the street and started opening up a clinic but probably has worked in one of your clinics for a period of time. You know they’re value-aligned. You're on the same page but then you also have to have a pretty solid standard policy and procedure manual so that everyone's not running off doing their own different thing. It's six different clinics. Talk to me a little bit about those two things.

In the first part, we were careful from the beginning with everybody that we hired. We've learned that the hiring process is super important. From the first time they meet somebody, we interview them 3 or 4 times. We want to make sure they're a good fit. They come and hang out with us in the clinic before we hire them. It's fair to both of us. We want them to know what the day is like in our clinic as well, if they can see themselves fitting in there. Anybody who potentially becomes a partner has worked for us for at least a couple of years. That way we get to know them as a clinician but also as a person. That is an important part of this whole partnership process.

Even from the beginning, we ask people what their long-term goals are with physical therapy. If somebody mentions that they would like to have some ownership one day then we recognize that person and we'll start to do some things from the get-go with them to maybe help foster those ideas and see if they're serious about it.

Is that something where you advertise?

We don’t advertise. We have seven clinics in Southern New Jersey in between Philadelphia and Jersey Shore. PT is a small world. There's a lot of PTs that don't work for us that know what our model is. I get a ton of resumes because people know that we have at least have the potential to move into some type of partnership profess. It's not super easy to get to that point but we have proof that this is what we do and people like that. It's a good recruitment tool for us as well to get PTs interested in us who are motivated enough to possibly have their own clinic or be a partner down the road.

Are there some people who have expressed interest in that where you said, “That's probably not a good fit?” Have you ever across that?

A lot of it is self-realized by them. A lot of people feel like they want to open their own clinic or want to be a partner but then sometimes when it comes down to it, the realization is there that this is a lot of work and it's not easy. One thing that we're doing is being motivated by us recognizing the need. If we're going to continue to grow, we don't want to grow to be able to say we have 10 or 15 clinics. We want to make sure that any clinic we open has a good chance of being successful.

We're starting what we call a leadership program. We have 25 PTs in practice and this is open to all of them. They have to apply for it. It's a year-long program where we're mentoring them to become clinic managers or partners. We're only going to take 4 or 5 people a year because we want it to be a little bit exclusive but we want the group to be small so we can get a good discussion going. If we took everybody the first year, I don't know what I would do the second year anyway.

That creates a demand. To say that it's exclusive to a certain number of people means you're going to weed out some people but it also inspires some people like, “I want to be part of that group.”

I hope that's what it does. There might be people that are disappointed if they don't get into it the first year but we'll make sure that it's not because we don't think you can’t do it. It's because these are the 4 or 5 people we thought were best for this now but like, “I hope you're still interested when the chance comes again.”

What is their commitment? What are you providing? Do they have to be available certain days of the week or once a month? What is your routine? How much detail can you share with me about the program?

I can still put it together but there's going to be six. Our clinics are all pretty close together. Nobody's more than 40 minutes from another one. Six times a year, we're going to have on-sites where we do probably 3 or 4-hour blocks of on-site learning. We'll have them be shut off from patient treatment for that time. In between each of those six on-site meetings, I'm going to do some one-on-one meetings with each of the people in the program. They're then going to have some readings. We have some required readings.

I got your episode with Stephen Rapposelli where you were talking about books like Who Not How. I immediately got that book. That was a life-changer for me. That is going to be one of the required readings as part of the program. Also The 7 Habits of Highly Effective People. That's the first reading to be read before the whole program starts crashing. We're going to do good books, some TED Talks, podcasts, that kind of stuff.

We had something similar. We had a leadership development program and there was a library of books that were required reading. This is how my partner and I came to have the business beliefs that we have. It's imperative that you read those same books and we discuss what's important about them. They can have their own mindsets as well but it aligns with the mentalities and mindsets. They can see, “That's why you guys do that thing. Now I understand.” They go back and put 2 and 2 together.

We want to create an attitude of lifelong learning. A lot of the people in the program are probably more focused on their clinical learning, which is great because, believe me, we want to have awesome clinicians. We also want people to take the next step like, “How can I further myself as a manager, leader or partner in the company as well?” I'm looking forward to that component for sure.

The hiring process is important. Be careful and make the right decisions. Click To Tweet

That's going to be cool because, honestly, we're physical therapists. We haven't had this kind of training before. For you to share that with your team members like, “This is how to be a leader. This is how we run a business,” to pull back that curtain and give them that training that all your 5 to 7 partners have is something that most people pay money for.

We want to put that as an investment in our employees. I know that it's going to come back to pay us dividends big times.

The second part of the question then is how much effort and what have you done to unify policy and procedures across all those clinics?

I'm the COO of the company. I always joke with my partner. I'm probably the least organized person in the whole business. Somehow that got thrown onto my plate, which is ironic. I have somebody that works with me that’s a total all-star for us. We know that's ever-evolving. We meet every week to make sure that, “Here's the gap here. We have to figure out a way to fill in the gap.” Something as simple as keeping track of our co-pay collection rate or pay to the plan of care get all faxed out. We missed three from last time. It's ever-evolving. We're becoming better at being organized and having some centralized processes and systems. Otherwise, stuff would fall apart.

It sounds like you found your who to help you with that.

I'm not the who for that. I would probably be the worst one. The company would fall apart if I was the who on the operations part.

It's a worthy investment because to pay her to do that with you and coordination is going to be essential for you guys to continue to expand. This is probably something that you might have seen as you took that first location on and the next location. As you started expanding, those holes and weaknesses started to get magnified and exaggerated.

We saw and recognized that. We said, “We need an employee that is dedicated to this.” At first, you're like, “Are we going to pay somebody to do something that seems easy?” Once my partner and I didn't have to do it as much anymore, it was like, “How do we even think that this wasn't going to be worth it?”

As you're working with your partners, it's not like, “Here's your clinic, go off and do it. That's great. We'll talk and collect some money.” What kind of communication schedule do you have with them? Do they report things to you? How does that all workout? What is your relationship?

Another thing that's high on our priority list is we want our relationships with our partners to be as good as they can be. One of the tough things that we went through in having partners was my partner and I took some things for granted. We didn't do a great job communicating some things. That led to some frustrations on the partner's side and with my partner and I as well. That's demonstrated to us, “Here's how important it is for everybody to be on the same page.” As a leadership team, my partner and I meet with all the partners once a quarter. We do a three-hour partner meeting.

My partner and I communicate with all the partners on a regular basis one-on-one. Everybody is a little different with how they want to communicate. One guy I talk with every week, another one I talk with every two weeks and one is once a month. As long as we feel that our relationships are good and we're not losing anything, whatever frequency they want, we're happy with it. There's a structure to each call. There are certain things that we talk about and go over. Sometimes it ends up being like half the conversation is talking about non-PTs, talking about life too, to develop the relationships not just the professional component of it but even the personal component.

PTO 163 | PT Partnerships
Traction: Get a Grip on Your Business

You the COO. Are you the one that's also getting the clinical statistics on a routine basis, reviewing them and then also discussing if there are issues out points or decline in stats?

That's on my task list for sure. We've gotten good at defining what metrics are most important to us and getting them in an organized fashion in one centralized spreadsheet. We still have a bunch of spreadsheets and one of the frustrations was, “I got this and that spreadsheet. I don't even know what to look at.” People ended up not looking at anything. There’s a time where we've been like, “Here's what you guys need to look at the most.” It's all on this one spreadsheet and that has made life a lot easier for all of us, for sure.

When you guys are all together, what things are you discussing on those quarterlies?

Stuff that's relevant to the entire company. My partner is a big fan of The Five Dysfunctions of a Team. Probably one hour of the meeting is he’s going to be doing an exercise where I don't even know what's on tap for that. I saw it on the agenda so I'm pretty excited to see what he has in store for us. There's almost like a team bonding component to that meeting but then there's like, “Here's the policy we didn't think of.” We meet collectively to come up with decisions.

Another thing that was hard for me and I would imagine for my partner too was by including other partners with us, all of a sudden, we're not the only ones making the decisions anymore. I could only think of a couple of situations where there was some frustration. Our partners share the same values so it hasn't been as much of a negative as I think it could have been if we weren't careful about choosing who our partners are but you lose some of your decision-making authority.

I am assuming you and Ken still have veto power and hold that to some extent.

Yes on the basis of the individual clinics. In 2020 when we were faced with the proposition of closing or staying open, we put it out to a vote. At the time, there were seven of us. My vote was on the losing end and I had to accept it. I won't say what's inside I was but my vote lost and I had to live with it. That ate at me for a little bit but then eventually, I came to accept it. This is the route I chose.

That says a lot to the relationships that you've established with your other owners in that. It sounds like they were willing to accept it as well if it didn't go their way but once it did then it would be like, “This is what we're doing. In this direction, we're going to do this. Get over yourself. This is what we're doing as a team.”

We accepted it and moved forward. I'll toot our own horn. In 2020, I talked to a lot of other practices and they were down in visits and revenue. 2020 compared to 2019, we were up in visits and revenue. A shout-out to all of our partners and employees that were able to pull that off.

What do you think it was? It's because of this maybe one action or simply one characteristic that you could name as a descriptor for your company. If you look back, what would you think that reason was that things went well?

Sometimes pride gets in the way of a lot of things. Everybody's ability to put away their pride accepts it. There's a lot of different decisions we made and there was disagreement with all the decisions. Once the decision was made, we were able to put away our own personal biases and said, “This is what we decided to do. We're going to move forward and make the best of it.” It’s not just my partner and I but the leadership of all the partners and then the rest of the employees.

We have 65 employees seeing a unified front and it felt like it was a huge factor. With any decisions we made, we were transparent with all of our employees. “Here's what we're doing.” We furloughed people for a while and that was hard to do but we were upfront with them. We told them what was going on. “This is our plan to be able to get your back.”

Congratulations on what you've developed. It's amazing to see the growth of your business overtime. It sounds like you've leaned on the things that you've been reading. You and Ken have put some of these things into practice. You've been intentional about your growth. This opportunity was afforded to you. You weren't necessarily seeking to open that second location but once you did, you recognized here are some of the things that we need to do in order to make this successful.

That took off from there.We said, “This is a good idea.” We like giving people opportunities to be in positions of greater responsibility. We think it's awesome when we tell a partner that they can write a profitability check for their profits for last month. To give them the power to hire the ideal therapist they want at their clinic, they're in charge of all that. We might help out if they want an opinion but we are allowing the ability to put people in a position where they can succeed and do their best. I know that might sound corny but that's a cool thing to be able to do.

We've covered some of the pros and cons. Are there other hiccups that you've had along the way that you want to share?

The hardest thing is the organization of it all. That's getting back to that COO stuff. My partner helps out plenty with the organization because there's the financial and the metric organization. That's the hardest thing. My partner and I still treat but we're treating less than less. We're dedicating more of our time towards some of these centralized things that time needs to be spent on. We want to grow but in an organized and controlled manner. One of the biggest challenges is keeping everything organized as the company gets bigger.

Do you foresee a point where you and Ken won't be treating anymore? To follow up with that, would you be okay as some of those clinic partnerships’ businesses started growing if they started pulling away a little bit more from treating so they could work on the business?

One of the partners is decreasing his treatment a little bit. He's having one of his current PT takeovers managers in his office and he has our full support. We think that's great because he's thinking about, “Maybe I want to have a second office that I'm a partner in.” He'll have somebody that can run the day-to-day of this current office. I like to treat.

I have a bunch of friends. They're runners and athletes. They're all getting banged up. If they call me and they need to be treated, I want to say, “I'll get you on my schedule. No problem.” We have awesome therapists in all of our clinics. It's cool to put them in positions where they're getting the chance to treat maybe the patients that would normally fall in on my schedule. It's good to mentor and help them to see it as a clinician as well.

Create an attitude of lifelong learning. Sharing your equity with partners has a lot of benefits for you. Click To Tweet

Along this way, you've read some books. Did you get any consulting or coaching along the way to guide you guys a little bit on some of these decisions? Did you have a mentor?

We started working with Steve Stalzer and Mike Osler. They’re with 8150 Advisors. They were recommended to us by a couple of people in my peer-to-peer group. Any private practice owner out there who is wondering if it's worth the investment, it's hard. It costs money. It's not free. I've only been doing it for months and I'm not even batting an eye. I don't even know what the cost is but it could be anything. It holds you accountable and spurs you to do things that maybe you wouldn't think of to do on your own. My partner and I sit with them. We do it together every other week.

Do you want to share with us a little bit about what you're doing in New Jersey that you might want to share with other owners across the country?

I have to give credit to my partner for this. We're in New Jersey. In terms of the collections, we have probably one of the lower reimbursement rates from private insurance companies in the country. We want the private practice to survive. All around us, there are private practices that have been selling to corporate and hospital entities. We don't want to do that. Our intention is for our current partners to be the majority owners of the clinic down the road when I decide not to work anymore. We're making a push to form what's called a supergroup where we're getting other private practices to join up with us.

PTO 163 | PT Partnerships
The Five Dysfunctions of a Team

We're not purchasing them. There's no equity exchange but we have to share certain services in order to be considered a common entity. We're going to take over their billing. They're going to use our EMR. We'll do their payroll and benefits to allow us to gain geographic scope and also to become a bigger company so that insurance companies would maybe listen to us a little bit more readily in terms of negotiating contracts. We're starting that. We've done all the meetings, met with the lawyers and all the paperwork's in place. We're trying to recruit clinics that are interested in joining up with us. That's a big thing on our radar.

You're taking this umbrella company that holds all these major administrative tasks where all of the LLCs underneath that umbrella are the ones that you either own, partners with or partners of your clinics. You're expanding that to include people who you have no financial relationship with. You're going to unify some of the admin-related stuff, whatever it takes to be considered a shared entity.

From experience, we know that there are practices out there that the owners have many headaches and can't focus on the things they want to focus on. We'll take away some of the headaches like billing and payroll and allow them to build their practice. We have some interests and we're confident in the next years that we'll have a bunch of clinics that have signed up with us.

Anything else you want to share in terms of the partnership models, LLCs that you established that you would like to tell?

We've had people who think we're crazy for sharing our equity with partners and the amount of equity that we allow people to have. I wouldn't do it any other way because there are so many benefits to it. I still work a lot of hours but I have a wife and kids. I can spend time with them because I'm not doing every single thing for every single clinic that I own. For private practice owners that are thinking about doing this, I'm happy to be a resource as well. If you want to reach out to me, I'm happy to talk to you about the pros, cons and any of the details that you would want to know about. I'm a big fan of doing it this way.

From my point of view, the people in my network that have multiple practices greater than five, the ones that are the most successful and are expanding the most are those that have established these kind of partnership relationships with value-aligned people on their teams that they've vetted and know they're going to work well. The personalities match and the values aligned. They understand their purpose and their vision. That all align and it's been successful to the scope of some of my friends. I had Blaine Stimac on the show in the past. He's over 30 clinics. A vast majority of those are partnerships and they're across different states. It's the way to go. If people want to ask you or reach out to you, how can they get in touch with you?

My cell number is (508) 259-5481. You could call or text me. My email is That's the easiest email to get in touch with me. I'm happy to be a resource for sure.

Thanks for sharing. I appreciate that. We'll have to stay in touch in 2023. We'll come back around.

Keep the good shows coming.

Thanks. I appreciate it.

Important Links:

About Jeff Sallade

PTO 163 | PT PartnershipsJeff Sallade is co-owner of 3 Dimensional Physical Therapy, with 7 locations throughout southern NJ. Jeff and his business partner, Ken Guzzardo, recently celebrated 3DPT's 10-year anniversary. The one thing that Jeff attributes to lasting 10 years is having the confidence to surround himself with great therapists and partners who are just as motivated as he is to succeed.

As you will hear in the podcast, Jeff feels he chose the best possible path for his business by opting to offer a partnership to PTs at each of his 7 locations. Outside of the clinic, Jeff enjoys reading leadership books, playing soccer with his kids, competing in triathlons (although he has slowed down recently due to having both hips replaced) and traveling with his wife and 2 kids all over the country.

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PTO 162 | Multiple Income Streams


Do you know that clinics don't have to be private practice owners' sole source of income? In today's episode, Eric Miller, the Owner and Chief Financial Advisor of Econologics, shares with Nathan Shields the importance of creating multiple income streams and how you can do it. It isn't a sudden shift of capital; instead, it's a steady effort to create wealth from other financial sources, leveraging the clinic's revenues to diversify your wealth. If you follow this episode, you'll witness a dynamic change in your financial future. You wouldn't want to miss out on this opportunity. Tune in!


Listen to the podcast here:

Creating Multiple Income Streams From Your Clinic With Eric Miller Of Econologics

I've got Eric Miller of Econologics on with me. Thanks for joining me.

My pleasure.

We got to stop meeting like this. We need to change the name of the show like Eric and Nathan Show or Nathan and Eric Show.

We can do all of the above, but it's fun to talk about all this money and finance. It's more important than ever people get their money right.

Every time we talk, we tend to start talking about other things that are going on in the private practice world and you tend to come up with some other things that we could talk about, “Do you think your owners would be interested in this?” I say, “Of course, Let's talk about it.” It makes it too easy and we're continuing that conversation. Share with us what you want to talk about on the show because I think it's important for owners to get this larger view, this bigger perspective of what their clinics can do for them financially.

If you took a survey of 20, 40, 50 practice owners, 90%, 95% of them if I asked them the question, “How reliant is your household on your practice income?” Most of them would say, “My household is heavily reliant on my practice income for its economic survival.” My follow-up question is, “How many of you want to be in that condition forever?” Almost all of them are like, “I don't want that to be the case.” It's imperative that no matter where you are in your practice journey, you start thinking about, “How is it that I can start building multiple streams of income for the benefit of my household?” I'm not relying upon a practice cell for my, “Retirement.”

That is something that people should be thinking about immediately. The concept of having multiple income streams is not new. I didn't make that up. That's been around for a long time and it is true. I think it’s the sequence. People start chasing other income sources without getting their main income source, humming and purring. They take their attention away. "Maybe I'll go through this real estate flipping. Let's get my practice flowing like the Mississippi first and making sure that I set up the right channels for money to flow to the household to build other income sources."

It's important that you said it's time to start thinking about it, not to start doing something right away. Thinking about what those other income streams could be with ideas down the road. Maybe look at your vision board 2, 3 to 5 years down the road as necessary but focusing on, “I want to have multiple ends of constraints, but let's focus on getting this one solid and strengthened first where I can now divert attention without hurting my business.”

The business is still the main generator of your wealth and that is the case. You want to make sure that it is serving the needs of the household and you set it up so that it can do that accordingly.

What do you think would be a good marker for someone to say, “Now is the time for me to look at other income streams with more attention?” Do you have an idea in your head of where a practice owner should be at that point?

There's no such thing as a bad investment, just the misapplication of it, except for attempts to defraud and rip people off. Click To Tweet

Let's take someone that's starting a practice. You shouldn't be thinking about building other income sources if you're starting your practice. You're going to be getting new patients in the door, growing your practice, growing your marketing. All those things are where you should be diverting most of your money. I think once you start hitting that threshold where maybe you do not have to treat full-time, the revenue range could vary, once you start hitting that maybe $600,000 to $750,000 range where you've established. I think that at that point, “Let's make sure as this thing grows, that I'm not channeling all the money back into the business that I am siphoning off some of this money to go to the household.” Specifically, to create other income sources. That's probably a good marker, as far as revenue.

At the very least, they're not treating full-time and ideally, maybe they have a trained and trusted leadership team of some form or another, even if that's 1, 2, 3 people on board that they delegate day-to-day operations to.

I think at that point in time, you've established that you do have a real business going on. It's not you, one other person and that's it. I have a business, I have an organization board, we've written up policies, procedures and all that. I've grown up, now I need to make sure that this business serves my household accordingly.

I'm glad you bring it back to serving the household because that's something I know that we've discussed in the past, but for those people who haven't read those previous episodes that we've discussed, how the business serves the household? I'm glad that you brought it up and reminded the readers of that.

This idea is that it's going to take 30 years to accumulate enough money to, “Retire.” We're trying to rid people of have that notion that it shouldn't be able to do that. If your practice is viable, it's growing and you set up the right systems, there's no reason why you can't be financially independent in a 7 to 10 year period. I think it's a real number, but you have to set it up accordingly so that it can do that.

I know you have something you want to share with us. Is this a good time to serve people who are reading?

It's a blueprint for how to create multiple income streams for the benefit of the household. I'm going to preface this by saying that a lot of people have been under the notion, I'm going to go back here, like the traditional wealth-building model. Any of the people reading this, I know that they probably work with financial advisors in the past.

Traditionally what advisors will tell you is to save enough in your retirement accounts. Eventually, you'll have enough that can replace about 70% to 80% of your current income. They'll run all these fancy simulations that show you that if you do that, then the probability is that you'll run out of money are a little bit small. My issue with that is who wants to live on less income?

When you figure taxes, inflation and all these things, it's a model. It's like, “Why would I want to do that? I don't want to live on less. I want to be able to live on at least what I'm making now or if not more.” That's been the traditional wealth-building model. It's like, “Here's my practice. Let me take enough money home from my household where it pays for my lifestyle, my taxes, my debt. I put money in qualified plans and maybe some brokerage accounts.” That is the target. I'm not saying this is terrible because it's better than doing nothing. It's certainly better than not having anything, but I feel there's a better way to do it.

Let me go over how this works. It's a shift in a viewpoint that your practice is not more important than your household. We've talked about this concept before the household being the parent company. Everything is eventually going to flow for the benefit of the household. The practice is there to serve it, but it also needs to be viable because if your practice isn’t viable, then you're going to have problems channeling money in the household.

This is why it's important to make sure your practice is profitable, sustainable, transferable, new patients, all those things that you guys talk about in working with people, that your business is getting into that condition. At some point in time, you are going to have to figure out a way to set up that wealth storage account, which again is the owner compensation of the three hats that you wear in the business. That is the owner's compensation.

You should be taking enough out of practice to pay for your basic lifestyle, your taxes and your personal debt, whatever that is. Salary and some distributions are typically what they would be. I know this says 15% to 20% distributions, probably not. It's more like 5%, I would say. Figure a salary in 5% of distributions and that should cover your lifestyle, your taxes and your debt.

Make sure you set up that wealth storage account, which is a bank account or some kind of an account that's going to get linked to your business account. Every week, an automatic draft comes out from the business checking to that wealth storage account like clockwork, 10% ideally. I know people can't start there. Try not to start there if you haven't done it before, but you're trying to get this expense into the business so that it comes out every single week.

PTO 162 | Multiple Income Streams
Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine

As a testimonial to that, I had a coaching client who, during the pandemic, started this. He followed your advice. He also read Profit First by Mike Michalowicz, who says the same thing. He started with a small percentage, 1%, 2%, 3% weekly. Whatever his collections were, he put that into the savings account and did it faithfully even through the pandemic. He's a small practice. It was him and another PT and that has grown since getting some coaching, but now he's got this $40,000 sitting in a savings account after a pandemic year. He's like, “I didn't know if it was possible. I didn't think I could do it.” He does it now. Whether he thinks it's going to hurt or not, he does it and went fine.

Nothing bad has happened to him because of that. The message is what you hit right there was that he looked at it as a necessary expense. He pushed the practice hard enough to cover it as an expense. It's one of those natural financial laws, phenomenon or whatever you want to call it that I know seems a little mystic when you say, “Don't worry about it. The money will show up.” It does. There's a demand for it because it's an actual expense.

That's a perfect example of someone that was like, “I have no idea where the money's going to come from because I see the numbers. I know my expenses. I know that it's physically impossible for me to do this and for this to work.” I'm like, “Do you want to bet me? I've had many people that have told me that and I bet them. I win almost every time." If you do it, you'll have a certain amount in your wealth storage account. That's the first thing to do.

What do you recommend people do with this chunk of change that they got now in these small storage accounts?

It’s not ideal to have money sitting in a bank in any case. You want enough to have reserves, you want enough to have emergency funds, but ideally, this money isn't sitting in here to do nothing.

We did a full blog on this to refresh people where we talked about the many different savings accounts you should have, whether it's an emergency account, rainy day fund, fund account, tax account. All this 10% can go to all these numbers of things.

The 10% is for the household wealth storage account. The other accounts have their own percentage that you would put into those. Remember, this money is for the benefit of the household. Those other accounts may have been for the business and your personal taxes. The money is not designed to sit there and earn 0.00001%. We want to get it in motion from that perspective and then it comes to what types of investments do we want to put it into?

By and large, this is where you can get in many differing opinions of how people invest money and their viewpoints on, “That's good. That’s a rip-off. I've never had any success with that. My dad said only invest in this.” I've been doing this long enough that I finally figured out that there's no such thing as a bad investment. It's the misapplication of it, except for attempts to defraud people and rip people off, which there are people out there that.

By and large, most people that, when they put their money in these different categories, as long as they do it correctly and they understand, then they're going to have a positive result. I can dig deep into each one of these buckets if you want me to start there. These are different buckets and your expectations need to be different on each of them because they're different and they serve different purposes.

Wealth management would be traditional stock and bond investing. If you're a big believer in public securities, equities, maybe some fixed income, then certainly there have been plenty of people who have made a lot of money in those types of strategies. From my standpoint, I would want to make sure that the allocation is correct, meaning that I'm not overly exposed to loss or risk, knowing that my practice is a pretty big and risky investment at the same time.

It's prudent to build other income sources, so it's not the sole source of your retirement when you do sell the practice. Click To Tweet

What ends up happening with a lot of practice owners is they end up taking all their reserve money and they throw it in S&P 500 or whatever kind of 100% exposure and then the market goes down 40%. They're like, “My business now is suffering and now my retirement's down 40%.” If they're going to invest in that area, be a little bit more prudent on your allocation. Not being weighted in equities is a smart approach. That money's liquid and it's accessible to you. You can dip it. You can borrow against it if you need to. There are securities back lines of credit that you can get. As long as you do it right, you can get a positive outcome from it.

You have insurance products. You're going to get 1,000 different opinions on insurance products. Some people are like, “They're a rip-off. The insurance companies are just making money and your money's tied up.” I'm like, “All those things have some element of truth, but there is no other financial institution on the planet that guarantees an income for life and can provide some element of tax-free income like the insurance carriers can do.” Not only that, but I think a lot of people, probably a little nervous that Social Security may be there when we go to ask for it. It'd probably be prudent to have a portion of your money in some guaranteed products that can provide that income source for the rest of your life.

What are some of those products? Just name a few.

That would be like annuity contracts, cash value life insurance. We could narrow that down because there are specific types that you have to do it right. You have to do it correctly. There are specific types that you would buy, but that doesn't change the fact that you can get a positive outcome by doing it. There's that misnomer that all products in this category are bad and I get it because you talked to an insurance guy. He’d be like, “Why are you investing in the stock and bond market? You should be taking all your money invested in insurance products.” You talk to a stock market guy. He'd be like, “Why would you invest in insurance products? You're going to make 8% to 10% in public securities." It's like the scorpion and the frog thing.

I'm looking at this from a household perspective. That sounds pretty prudent to me to have some exposure to those two categories. The third one would be real estate. There are 1,000 different ways to buy real estate. You can do it yourself. You can do it with a partner. You can do private placements, whatever it is. You have to know yourself and find out which type of real estate that you have the most affinity with and that is going to produce your income and cashflow. I think by doing this, it minimizes your chances that if the stock market goes bad, big deal, I got plenty of money and insurance products and real estate. The real estate market goes bad, big deal. I got wealth management insurance products that are relied upon.

I'm not dependent upon one of anything. If I combine that with maybe I own my own building, which I would encourage if you can do that. I don't know if that's always possible, but it's certainly advisable to get that because depending on who's going to buy you out, especially corporates provide incredible lease arrangements with people that own their building.

In the real estate space or considering real estate, this 10% expense line, if you don't own real estate, would you recommend this chunk of money that's in the savings account be something that could be set aside for a down payment?

Absolutely. Let's say my practice is doing $1 million a year. Ten percent would be $100,000. How should that be split between these three buckets is usually a question that I get. There's no hard and fast rule. One of my advisors is like, “I do a third, a third, a third.” I’m like, “That's fine.” Some people are naturally inclined to real estate more. Maybe they do 50% of that amount in real estate and then they split the rest up between the other two.

I don't have a hard-fast rule. I think you can do all three, you know, especially if you're doing your full 10% and you've got a viable practice. This is how I do it. I put money in a storage account and then I try to do all three of these things. I'm building multiple income sources by doing that. If I do that in combination with growing my business, then in that 5 to 7-year period, I should have created enough to be able to cover my lifestyle expenses at least.

Have you seen anyone take this form or discuss this type of scenario with other financial advisors by yourself? Have you experienced what the feedback has been?

PTO 162 | Multiple Income Streams
Multiple Income Streams: No other financial institution on the planet guarantees an income for life and can provide some element of tax-free income like the insurance carriers can do.


I can only imagine, though, that what ends up happening because you got to look at how financial advisors are paid. If you go to a fee-only advisor, he's going to say, “Do wealth management.” Number one, he wouldn't get paid for insurance products and certainly doesn't get paid for real estate. He may have you invest in a REIT or something like that, which I'm not like completely opposed to. I think they're a little bit watered down by the time you invest in it. I like private placements if I don't have to do the work because I don't have to do the work on those.

That's generally what happens is that it flies in the face of their recommendations of have put everything in public securities, put everything in the stock market. Regardless of what happens over the last many years, they're thoroughly convinced that it's going to provide you an 8% to 10% rate of return every single year on average, given the up years in the down years. Fundamentally, I disagree with that concept that is the only place that how you should build your wealth. I'm like, “I think you need to look at all three.”

I've heard you say this before, “If you've got a number one referral source, start finding number two.” It's not good to have someone that is 60%, 70%, 80% of what you need to keep your business running. You could say the same thing about your wealth. You don't want 80% of your wealth into one thing.

The reality is when you break down a household of a practice owner, it ends up being that your practice in, generally speaking, represents about 60% of your overall household net worth because of how fast it can grow. The value of it can grow, especially if you're working on growing it. It's going to grow at a much faster rate than any of your other outside investments if you're doing it right and that's where your attention should be. It's prudent at the same time to build these other income sources so that when you do sell the practice, it's not the sole source of your retirement.

I can be a testament to that in selling our practices down in Arizona. It's provided a lot of income, but the thing that's providing continued income is the real estate that I had behind those practices. That's given me a foothold to buy other real estate opportunities and whatnot. I can attest to the fact that the sale of the business provided something and that was great, but going forward, I'm looking at a lot of my retirement being more in the real estate realm than the money that I got from the sale.

The same thing goes when you sell. It's a big event. Putting it all in like a brokerage account or something like that, it's probably not the smartest thing to do. You want to have some familiarity with these other “alternative investments” so that it's not foreign to you when someone says, “I think you should put money in here.” You're like, “I've never even heard of that before.”

I heard the word annuities, but I didn't know what annuities were until after I sold the practice and cash value, life insurance plans. It wasn't until after that fact that I started learning about these things as opportunities and I had to weigh them out.

From a return standpoint, you're not going to get anywhere near the same “return” that you would if you invest in real estate or wealth management, but that's not what they're designed for. They're designed for stableness, having some stability in your assets in case there is something that goes wrong in the wealth management and the real estate space. I know it's workable. I don't know if it's the best strategy, but I know that it works.

By doing this, I find people’s condition gets better and they feel it empowers them to be like, “I got all this stuff set up automatically and systematically. Let me work on my practice now and grow that.” Where your wealth is going to be made is on the sale of the practice. A majority of your wealth is going to be made on the sale of the practice.

Considering that or outside of that, you've got other streams coming to the household and what are those?

If you have a qualified plan that you've been contributing to, like a 401(k) or an IRA, that would be another income source and then the practice building would be another one. Even outside of that, if you are setting up multiple practices as well, you can monetize a lot of things. You can monetize your intellectual capital. You can put money into some other business that you like. You can do that as well.

Don't follow the same cookie-cutter advice you hear everybody else talk about. It's different for you. Click To Tweet

The wealth storage account isn't just for these three categories. The nice thing about the insurance products, you can leverage them to even buy more if you want to. A lot of these things you can utilize leverage to buy another asset, investment, business or whatever it will be. A lot of opportunities come into play when you position yourself in these kinds of accounts.

I love that how you open that up a little bit more to say, “Take this wealth storage account that siphoned off of the 10% of your revenues.” If you see a business of a friend, a family member, you name it that you want to invest in and provide some seed capital, what a great opportunity to see your wealth grow. If you have an idea for a product, this is where you take the money from this account to do some research, development, promotion and marketing of that product to see if it has legs and move forward. It's that thing that provides a lot more opportunity for you.

The thing I try to impress upon people, it's there for your future household financial survival. It's not for boats, cars or things that are going to depreciate in value. It's for income-producing assets, businesses, real estate, whatever that is. That's what the wealth storage account is for. Wealth storage accounts are named appropriately. It's there for you to store money until you can find something that would create more wealth for your household because money is not wealth. My best example of that is if you got stranded in Alaska in the middle of nowhere and you had $10 million in cash, would you be rich?

Not much to do with $10 million out in the bush.

Money doesn't represent wealth. It is having assets that produce something of value. That's what having wealth is.

I love the model and it's all based on that 10% withdrawal of your gross revenues on a weekly basis. When you were starting off, that number is relatively small and you think, “What am I going to do with a few thousand dollars? There's not much that can be done.” As this accumulates over time, it has a lot of power that can be available to you because for some annuities. You can get started for quite a little bit amount of money. You can put some of the stockings into stocks, but real estate, if you're looking at owner-occupied real estate, the terms there are significantly greater than if it's an investment per se. There's a lot of opportunities that you have even with a small amount of capital.

What kind of real estate do you like? Are you getting all kinds?

I personally like commercial real estate, to not have to worry about tenants, midnight phone calls and that stuff. I get my share of calls, but commercial properties are a little less hands-on. That was a great opportunity that I had with some of the commercial real estate that I had at the time of the sale was to sell it with some great terms of the company that purchased the practice. Then do a 1031 exchange into a couple of other properties.

You have to have some affinity or liking for the investments. I think there is something to that as well. It can't be because I think I'm going to get rich on this thing. When it comes to real estate, I'd like simple. I get it. People need a place to rent for whatever reason. These are how the numbers work and that makes sense to me. For some of the more complex real estate deals, I'm like, “That's too complex for me.”

To each his own because I have a coaching client who sold his practice within the past several months and he's got plans to do a different model of physical therapy. One thing that he does with his wealth is he learned how to, I wouldn't say, day trade, but he makes a good chunk of change on the money that he has by playing with stocks on a routine basis. He invested a lot of money into that education. Now he spends maybe an hour each day setting up what he needs to do on his trades. That is money that he has set aside for wealth matters.

That would be a perfect example of that. He figured it out but went out of his way to get himself trained and had it a little bit on this area. He didn't go into it blindly.

I'm excited about the real estate side of things. He's more excited about the stocks and bonds like you're talking about.

I don't think it's bad to maybe overweight that bucket if you like it more, but I would still have some exposure to the other three because I don't know if you know the outcome for every one of them is going to be certain.

Thanks again for sharing this. Anything else you want to share about it?

PTO 162 | Multiple Income Streams
Multiple Income Streams: Money doesn't represent wealth. It's about having assets that produce something of value.


I think the big thing is that we don't want to be reliant on any one thing and the game isn't just an accumulation of savings. It is defining what it is that I want an income and working backward from there. I think you've got to figure out like, “How much income do I want to have?” That's going to allow you to look at how much in assets do I need to build to do that. If I want $20,000 a month of assets, $240,000 a year, I know I'm going to need at least $5 million in total assets.

I'm going to need at least that much to be able to generate that income. If I want $300,000, I'm going to need nearly $6 million in assets to be able to do that. It's important to define how much income you want when you decide that you want to transition so that you can factor in how much in assets you need to create to be able to hit that number safely.

You mentioned it earlier but being financially independent creates a lot of opportunities for you. I remember listening to a podcast and someone talking about the significant importance that financial independence plays nowadays when you consider a cancel culture. Having financial independence not only gives you an opportunity to do what you want to do but also allows you the opportunity to say what you want to say without fear. Go ahead and cancel me because I can do whatever I want financially. That could get worse in the future if you have ideas that are contrary to what is socially acceptable.

I didn't think about that, but you are right. You want to call it F-you money where you can say what you want to say because I have enough in assets, income and resources that household's indestructible or pretty indestructible. You have to have that viewpoint because it only does take one health issue, lawsuit, economic crash in a certain area that can devastate a household.

You have to make sure you have enough assets because not everything's going to go up vertically every single year. You're going to have corrections, asset prices, recessions and maybe even depressions. You have to have more than enough. Even if it comes down a little, it's not going to crash my lifestyle or my household, whereas people that are like razor-thin, something like that happens to them, game over.

Thanks for sharing. It was good to have you on again, as always. If people want to get in touch with you, how do they do that?

Go to We have plenty of downloads, videos, assessments for them to take to help you take a step forward in changing your financial condition. That's all it takes. It doesn't take much. If you are a practice owner, don't follow the same cookie-cutter advice that you hear everybody else talking about. It's different for you. You have to recognize that not all advice is alike that you should follow.

Thanks for your time. I appreciate it.

Talk to you soon.

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About Eric Miller

PTO 162 | Multiple Income StreamsEric Miller has been in the financial planning industry for over 20 years. He’s a co-owner of Econologics Financial Advisors – awarded an Inc. 5000 honoree since 2019. As the Chief Financial Advisor for the firm, Eric has had the good fortune to have over 10,000 financial conversations with private practice owners in various healthcare industries and helped guide them into a more optimum financial condition using a proven system.

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PTO 160 | New PT Debt


Do you know the biggest issue facing new PTs? It's not finding employment or the "right" job that meets their goals. No, their biggest issue tends to be the amount of debt they are burdened with after a long road or scholarship. The average PT comes out of school nowadays with >$150k in student loan debt. Considering the average salaries in out-patient practices, this can be an overwhelming obstacle to stay in the PT niche of their choosing. The episode's guest today is Bart McDonald, the author of Debt-Free PT. Bart talks with Nathan Shields about how he wrote his book to help new PTs and practice owners become aware of the current state of debt and overcome it as a collaborative endeavor. If you want to know more about the major issue most PT graduates face, this episode's for you. Tune in!


Listen to the podcast here:

The Biggest Issue Facing New PT's That Owners Need to Be Aware Of With Bart McDonald, PT

I've got a longtime friend and fellow physical therapy owner, Bart McDonald, owner of Superior Physical Therapy and Diagnostics in Idaho. Bart, thanks for joining us.

Thanks for having me on. This is a fun platform to be able to discuss good business things.

Thanks for joining me. I've known you for quite some time. Why don't you go ahead and share with the audience a little bit about where you're coming from as a PT owner, what you've been doing and what got you to this point in your life?

I grew up in Idaho. I ended up going to an undergrad at Brigham Young University then bounced from there out to Emory University in Atlanta. I was bent on a goal that I had to own my own physical therapy practice. Why I went into physical therapy? I was very excited about it. I realized within one semester at a private university that I was going to have more debt than I had first projected. That was a tough realization.

I don’t know if anybody reading has had that same realization, but I didn’t remember going in and talking to the department head one semester in and saying, “Dr. Catlin, I’m going to be upside down financially when I get out of school, I’m going to have almost three times debt to income ratio.” She said, “I don’t know what to do for you.” That was it. She was super nice, but that’s the facts. It was scary.

I got out of school and went back to Idaho. I was in a hospital-based practice, then I started a bunch of side moonlighting-type experiences to try to bring in money for the family, money to pay off debt and was able to get into a private practice within about four years out of graduate school. I started a private practice on my own, recognizing that’s what I wanted to do. Number one, that’s where I was driven. It’s where your passion leads you.

Secondarily, I was never going to get out of debt unless I owned a business associated with the love that I had for physical therapy. I couldn’t only be a W-2 employee and be able to get out of debt from where I was so I started that practice. Then from the end of 2004 until now, we’re opening our fifth location here in Southeastern Idaho. It’s been a wonderful ride and a lot of fun.

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Congratulations. You made some great strides there in your professional and ownership journey. Along the way, you alluded to some of the issues that you had in terms of taking on debt to get through physical therapy school. Thus, I know it's been within you for some time to write a book or at least address the issue of debt related to current physical therapy students and you've become an author. Tell us a little bit about it.

I wrote a book called Debt-Free PT. This project has been on my mind because this is the journey that I went through personally in my business and physical therapy career. I had over six figures in debt myself and came out making $39,000 a year. That’s terrible in that ratio. Also, for anybody out there that’s younger than us, they’re going to go, “That’s what they used to pay?” That is what I’ve used to pay and wages have gone up a little bit, but so has the debt. Probably a couple of years ago, I had one of my associates, a smart PT, who loved sports. One of his goals was, “I’m going to get board certified in sports.”

In his undergrad, he had been a collegiate athlete. We loved working with our sports injuries and were inside of our Gold’s Gym clinics. To describe this, it’s a 3,000 square foot clinic that is connected to a Gold’s Gym, so you’ve got your pool, strengthening equipment, dynamics, more functional sports-related rehab equipment at your fingertips. You can do anything in there. It’s amazing, especially for Idaho. I think there are probably some people that are like, “We find those sports centers for rehab everywhere.” Not necessarily an Idaho. This is the physical therapist’s dream for sports. He was in that clinic and we would always talk about which ACL he was rehabbing and which athlete and if they were getting better and stuff.

One day, I am looking at my email and I get something that pops up. It’s an email from him with his resignation. This blew me away because I thought this was my most satisfied employee and PT associate in our practice. I’m like, “I’ve been missing the boat here. What I’ve been missing?” I dropped what I was doing. We rearranged some things on his schedule so we could sit down and meet. He said, “Bart, it’s the craziest thing but I am so stuck financially. This is my dream job and yet I can’t stay.”

Seriously, looking at him, I almost got teary-eyed because I’m like, “What do you mean you can’t stay? This is your dream. You’re there. You’re right.” He said, “I’m way over $200,000 in debt. I’m married. I’ve got a couple of kids. I can’t buy a house and I can’t fix my car. I’m struggling to have enough to pay for my groceries. This huge student loan debt payment that’s due every month. I don’t know what to do about it. I’ve got a job offer in Geriatrics, so I’m going to have to drop my dream job to take something that I never thought I’d ever do.”

Don’t get me wrong. I think for those physical therapists that join our profession that loved Geriatrics, number one, it’s totally a critical aspect of physical therapy practice. I’m over the opinion that whatever is your passion, you got to follow that dream and find a way to make it happen. When I started researching a little bit more on student debt, I realized that I had been missing the impact of what’s going on in our profession right here, right now because the debt load is so heavy. It took me months of research.

I started researching out what the situation is for our new grads. What are they entering in? This didn’t get a lot of press because of COVID, but in 2020, the APTA released an impact study for student loans. Basically, it came out with a few stats that were quite alarming. First and foremost, majority of all of our new grads have over $150,000 of student loans. It was $156,000 is what they reported. You’ve got some in those private universities that are way over $200,000 like my friend.

Some may have found cheaper ways to get through school. The average being over $150,000 was quite alarming. The study was even a little bit better. They took a step further and they said, “How does this impact the physical therapist’s life?” They listed off these percentages. It’s a great study. Over 60% were saying, “I can’t buy a house and car. I can’t get married. I’m putting off having children. I can’t have a family,” including my friend’s problem, which was, “I can’t practice in the type of physical therapy setting, which I’d love to practice.” As I got thinking about this, I said, “That’s a shame.”

PTO 160 | New PT Debt
New PT Debt: Debt-Free PT: A Guide For Physical Therapists Eliminate Student Loans And Obtain Financial Freedom

Another thing that they compared was other medical professions and allied health professions, we are one of the worst for debt-income ratio. It’s really high. In looking at all that, I thought, “This burden of debt is terrible,” but it mirrors what I went through with my family and me because I did go to a private university. I did have over $100,000 with a much lower income at that time, the ratios were similar.

One night, I remember I came home, I was so frustrated to see people struggling to be able not to pursue their passion within the physical therapy career. I started making notes. From there, whenever I would start driving, I would start talking into my phone. I don’t know if you’ve ever done this, but brainstorming. It’s almost like this mind-meld vomit with your phone, where you’re dumping stuff and ideas.

I started sifting through these ideas and realized that the path I took is similar to what each one of these individuals faces. They might be a lot worse in so many ways, but then I started to even think about, “What are the solutions to this problem and outside of the APTA’s impact study?” As an aside, we should look and talk briefly about what the APTA suggested we do about it. The APTA is a phenomenal body and organization. What they’ve been doing and the transformation that the APTA has made in our career to be a reactive body or organization to be such a proactive, both capital deals. Otherwise, I can’t say enough about our organization. There are phenomenal.

All of the struggles that are up against us as a profession with this debt, you could tell by the suggestions that they were making, they don’t have a lot of control over this. In fact, almost not. The market and the business side of education is driving the outcome that we’re seeing for our new graduates. They came up with ideas like, “We should brainstorm what it might be like to restructure that DPT Degree,” but we don’t have any idea what that looks like. We’re going to have to get together with educators and come up with some solutions, but we don’t know. We need to get that national health path. We’ve been trying to get scholarships for the underprivileged.

We’ve been talking a lot about diversity in the APTA and the lack of it for the last year-plus. I think the APTA is making some strides there, but what are we going to do when the answer from some of our minorities would be, “I wasn’t born with a silver spoon. I didn’t have all of the opportunities that might have been given to other people that are readily joining the workforce and physical therapy. How can I be successful in this?” We need to be able to answer that question.

They brought up solutions to a lot more questions than answers. I almost feel like that’s what the APTA should do. It’s not the APTA’s burden to be able to solve all of our problems. That’s why we have smart people all the way through our profession that need to put our heads together. The APTA, in my opinion, is the springboard to organize and make that effort a reality. That’s what I expect for them and from our profession.

The book that you wrote is geared to help the physical therapy student or even the new grad to overcome any debt-related issues that they have. I think the important thing about your book, for my audience, is that owners recognize what they have to deal with. That can impact so many things. I don’t think you’re here saying, “We’ve got to up our salaries,” or anything like that. The importance now, where we’re standing as simply make owners aware of what these new grads are coming out with and what the average number looks like.

Not that it should necessarily affect the average rate or salary for a new grad because our reimbursements are relatively staying the same, but recognize what they have to deal with and what you can do to help alleviate the issue. Are there some programs that you can put in place? Are there bonuses that you can put in place related to productivity? Can you be a little bit more understanding of the fact that they’re going to want to moonlight or could you provide them moonlighting opportunities yourselves to gain some extra? I think the important thing now is, number one, to make them aware.

I came back at this same symposium. We had a bunch of owners together. When we discussed some of the impact studies from the APTA as a group, there were a lot of shocked people as owners of what that looks like for these new grads. There are some good strategies. As I came in and decided I was going to put a book together, it was two objectives. Number one, I need to write a book from my standpoint, having walked their path recognizing that I was in a similar debt-income ratio and I was able to get out of debt within six years, which was miraculous, but I went back through and created a step-by-step of how I was able to do that.

My wife and I had a very team approach. We put together a chapter followed by a home exercise program for that new graduate. Step one, analyze the debt. Let's look at what this debt looks like, see how the interest is impacting you, short-term, long-term and create a strategy for debt elimination. After walking through each of these chapters at the beginning, which is for me, as a new graduate, these would have been very revolutionary ideas. I had never encountered debt like this. The most debt I'd ever had prior to this was $100 on a credit card. I was debt-free coming out of undergraduate and maybe add debt on a car for $2,000. The beaver that was getting us from point A to point B.

We get through that and then the backside of the book can be taken on, as you said, ideas and more of a proactive way so that PT cannot be at the mercy of the interest rate, but how can I moonlight it? What are the steps I need to do to talk with my current employer? How do I not lose my skillset? If I'm going into outpatient physical therapy and maybe I have a love in sports or I've got a love in general orthopedics, whatever that looks like is fine. How do I not lose my skillset by moonlighting or going into some other aspect to make some more money? It even breaks down within physical therapy the most profitable aspects nowadays of our profession. Honestly, it's not always outpatient physical therapy.

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We've got a lot more lucrative things, sometimes in-home health and skilled nursing. Again, if you want to do Geriatrics, you've gone the right way as far as the money side of it as well. In that second portion of it, it's all breaking down the facts. Helping them create much like you would a business plan, a 1 to 5-year plan and even a 10-year plan for their own career. It's a career and business plan for themselves, whether they own practice or not.

If you're going to talk to owners about this, I think one of the first things that they might want to do is number one, read the book and maybe have a few copies on hand for other physical therapists as they're working with them so that they can give them some of these tools. Financial literacy is lacking in all of our educations, so providing them this support would be a huge help.

It was interesting. Most of the owners in that symposium in Texas, where we unveiled the book there. The biggest buyers were owners and were buying 10 to 15 copies for all their therapists and for their PTAs as well. When I was talking to the owners, I said, “What’s your biggest frustration when it comes to this topic?” There were two.

One was this common idea where they couldn’t recruit and retain because the debt was driving the decision for many people in our field. Two, it had this uncomfortable feeling. There are times where people that they hired as the owner like it was almost their responsibility to help dig them out of debt rather than a personal responsibility where it’s my student loans. Maybe as an employee, I’m coming to you. Nathan as the owner of the practice and saying, “I’ve got $200,000 in debt, Nathan. You got to help me dig this out. First and foremost, I know I’ve only worked for you for 90 days, but I need a $10,000 raise.”

I’ve heard that. That’s not a surprising request. As if reimbursement is going up and money grows on trees. There’s a lack of understanding. As an owner, I don’t know if you’ve come into the crosses, but when I’ve had a conversation like that, I am so surprised and almost upset. It’s a lack of understanding on my part and the PT’s part. We want to get out of that.

I think having the awareness, recognizing the state of physical therapists coming out of school nowadays and what they're dealing with in terms of debt load starts there, but then what do you recommend past that? What can owners do to speak to these new grads and the people that have a lot of debt load? What would you say to them outside of, read the book and help them out, then what? What are some of the things either you do or some of the things that you might recommend on a general scale?

One of the chapters that we do address is that moonlight. I think that the name of the chapter is Sacrificing More. Again, owning that debt because there is a misunderstanding or a hope that might be misled in a lot of these new grads that, “I’m going to wake up tomorrow. I’m going to have a government leader that’s going to forgive $200,000 in debt.” While we’re looking at an interesting financial status or in our history as America, I don’t know that any business owner or any individual should bank $200,000 of debt forgiveness on their future. That’s a tough way to go, but yet that’s pretty prevalent.

With coming to moonlighting as a suggestion and embracing that type of an idea of what needs to happen in order to sacrifice, there are also some other things in the third section of the book that is more based on owners, but also the new grad can glean from. There are other ways for PT owners to make better reimbursement. That’s what is also addressed.

PTO 160 | New PT Debt
New PT Debt: There's an uncomfortable feeling where the owners feel it's their responsibility to help dig their newly graduated employees out of debt.

For instance, in our practice, we’ve done Musculoskeletal ultrasound and EMG for a few years. It makes more per hour than anything else I get reimbursed for physical therapy. It also saves patients tons of money in MRI costs as well as unnecessary surgery. We’re saving the system money and yet, as business owners in physical therapy, it should at least attract our attention because the reimbursements are better.

At a time when all we’re talking about is decreased reimbursements. I can’t find any other aspect of physical therapy that is such a dramatic win-win, patient and practice. What we did in this is we started a couple of years ago, we decided that we wanted to get the training that was necessary within Musculoskeletal ultrasound and EMG that we were going to go all-in, especially for ultrasound. We were going to ask and then require all of our therapists to engage in this process. As we saw more therapists start down the learning path, we realized that they were having to spend a little more time in the evenings studying.

It’s not a road if you got done with PT school and decided you were never going to pick up a book or a journal again. That’s not the right road for you if that’s our expectation, but for those that are willing to study and work hard. We’ve figured out that we could give a significant percentage of the profits from this back to the therapist then leverage what the government has been doing in the CARES Act to give us the ability to pay essentially direct into that student loan account and save them by having about $5,000-plus for that first segment of our loan reimbursement each year comes out pre-tax. Our system that we set up and I think not everybody fits the same.

For ultrasound, we decided, “We want that diagnostic ultrasound piece for our patients.” We recognize that the research shows that it changes our plan of care as physical therapists for the better over 62% of the time when we use it. It’s for the patient’s benefit and it’s so much cheaper than any other imaging that’s out there to be able to guide the PT plan of care or medical plan of care for musculoskeletal injuries.

Secondarily, if we can invest back in the therapist and we’re getting a pay as much as $10,000 a year in student loan repayment per therapist. That is a bit of a game-changer. When we looked at the APTA’s impact study on that, it showed that only 8% of any employers within physical therapy aren’t engaging in any amount of student loan repayment.

The average student loan repayment within the ones that were participating, within the 8%, was about $18,000 total. We’re talking $10,000 a year, five-year contract plus what the cost savings are in that pre-tax dollar. We’re estimating that we can get somewhere close to about $60,000 in loan repayment over a five-year contract. It’s a game-changer for sure.

What can it do for your recruiting? If a student or a new grad is looking at a place where they can work and know that this person is going to help me with one of my major problems coming out of school. One of those is like, “I want to improve my skillset,” and the second is, “I've got this huge debt load on top of me.” If you can speak to that in your ads and you're recruiting. It definitely helps you connect with those people a lot more. Have you recognized that yourself?

That's been a tremendous benefit to us. We also recognize that it weeds out some of those folks that are not interested in learning beyond graduate school. We're honest about it. There's a learning curve like anything else in physical therapy. If I was going to sit for my OCS or SCS, I've got to study. If I'm going to sit up for my ECS and become a Board-certified Clinical Electrophysiologist or I'm going to become fellowship-trained in musculoskeletal ultrasound, we're all talking the same type of commitment.

Because we're marrying a problem, the problem being debt in the student, with a problem that we have, which is recruiting, retention and being able to do it on that commonality, I don't think you come across too many physical therapists that don't want to learn and don't love to learn. That being the solution between the debt and the growth needed inconsistent staff for the PT owner, it's the match made in heaven for recruiting.

What is going to happen in the next generation when student debt has crushed the entrepreneurial spirit? Click To Tweet

When you talk about some of the things that an owner can do, you've set up a bonus plan of some that can be tied directly to their student loan debt. I'm assuming there are other things that could be done. Maybe you highlight these in your book. They could be sign-on bonuses, especially if they're going to move from one state to another, something like that, some expense repaid or simply sign-on bonuses, to begin with. Have you thought about or even used it yourself, maybe putting them on four-tens, so maybe they have a three-day weekend to moonlight and spend more time? Is that something that you've also considered?

In fact, we have made that change. Honestly, as an owner, I’ve always not enjoyed the idea of four tens because I want each therapist to be totally engaged in their caseload and not be distracted. I had our board of directors, which is mostly made of clinical directors, came to me and said, “You’re talking the talk about loan repayment and moonlighting but you’re not walking the walk when it comes to enabling these guys to have the time to be attractive to other agencies, home health, or skilled nursing that would like to would like to do it.”

Now what you’ve seen in the past and I had to do a little bit of self-recognition because I realized some of these guys that are leaving our practice to go and take on something that makes more money in Geriatrics, I had not done all I could. For 4/10s, this has been something that’s been helpful. Other ones, we’re shifting it around and we’re trying to create a caseload based on their full scope.

We try to sit down with our PT associates in our practice on a quarterly basis. Those that want to be open enough to talk about their 1 to 5-year plan or 10-year plan. That’s what we’re trying to do with each one of them. If I want to be transparent on their debt, then we’re helping them track their debt. Not as if it’s my responsibility, but then I go, “I did create for one of your other coworkers an introduction to a home health company that’s good. That’ll work around your schedule. They like a 4/10 scenario, which day of the week. They’re looking for Tuesdays to be their PT Day, but they want 8 to 10 hours. Are you willing to do it? This is what they’re willing to pay.” I’m setting up moonlighting for them and trying to change some of the priorities of the way we cover our caseloads to facilitate and making it happen. Honestly, years ago, I would have done this. I needed to make some changes in my own mind.

What was the result of switching over to that 4/10 schedule? Has it been a relatively win-win for both sides, an extra day for them and similar, if not better productivity for you?

It's been similar productivity. One of the things that I think that's been helpful on that is that we work all of our PTs in a PT-PTA team. The day that the PT is off, the PTA is in and vice versa. Normally they're working side-by-side for 3/10, then that 4th, 10-hour day, they have some separate time away from their team member. It's worked out really well. Of course, you got to look at your supervision rules and the individual states and see how that works but that's something that's been productive in our physical therapy practice within those teams.

To come back around, where are you able to retain the therapist that wanted to take off after all?

I was not structured at that time for my good friend that bailed. I’ve had several attempts at a conversation with him like, “You can come back. We’re ready now,” but that’s tough because we had our chance. We have to recognize that each one of us in private practice like, “This is a journey.” Sometimes we kick ourselves and say, “That was a huge mistake,” but I don’t think we can look at the learning experience that we have as owners.

I don’t want to be too narrow-minded and say we don’t ever make mistakes. Our mistakes are part of the journey as long as we’re learning from them. We prioritized a more flexible schedule. We prioritized what moonlighting can make, mean for them and how to have important critical financial conversations. We usually have it with their spouse and take them out to dinner and make their family finance.

Not that we come at it and say, “We’re going to fix this for you.” Don’t get it wrong, but them, bearing their financial soul and talking about together. We tell them, “We want to help you by a level of accountability that most employers are unwilling to do.” We don’t have a money tree. We’re not going to bail you out. There are no bailouts, but we will try to facilitate and help, and we’re totally committed.

I think the more you can show that you are aligned with their issues, concerns and purposes in their lives, the greater potential you have to retain them and work together to create a powerful relationship.

A few years ago, I used to hear from new grads, “What do you want coming out of school?” Number one was always mentorship followed by a competitive salary. How to become debt-free is now number one. Hopefully, for owners out there, we've put in the time and effort. In writing this book, I wanted to make a book that was inexpensive because the last thing that a new grad needs is another $200 book. We all spent hundreds of dollars on our books every semester. Our goal was to keep it right at or under $20 and be able to give somebody a quick read at something that they can put into practice. If they follow the home exercise program at the end of each chapter, they're going to be successful with it.

PTO 160 | New PT Debt
New PT Debt: A few years ago, the number one thing new grads want coming out of school was always mentorship followed by a competitive self. Now, how to become debt-free is number one.

If people wanted, especially if owners wanted to find multiple copies of this book, what would they do?

You go to our website. It's You can order as many as you want and we’ll deliver them to your practice.

Anything else you want to share that maybe we haven't covered here that you think is vitally important for owners to understand or do in light of this issue that new grads are coming out with?

I guess the real light bulb that went off along this process for owners or personally as a practice owner is I recognize that drive that each of us has had to be an entrepreneur to make the best practice possible, make a difference one patient at a time with anybody and everybody coming through our door, and make a product that people would seek after and that would change lives. That’s who we are in our practice. Frankly, every time I talked to somebody with passion and private practice of physical therapy, it’s almost the same phrases come tumbling out or something like that. Those core values and everything that we stand for are real.

The struggle is, what is going to happen in the next generation when the student debt has crushed the entrepreneurial spirit? There won’t be that opportunity. I jumped in and have a 3 to 1 debt to income ratio. It’s pretty miraculous that I got into private practice. It came through a lot of hard work and a lot of moonlighting. There are probably a few owners that say, “I don’t know if my associates were willing to work that hard,” but there are those that are out there that are. The struggle is if the debt barrier is so high, their dreams can never be accomplished, whether they’re doing it with you as a part of an ownership expansion or even on their own.

You look at physical therapy in general when we look at who’s our champions? Who are the champions within our profession? Look around in the APTA and private practice. We have these long-term stalwart heroes in my mind. What’s going on Capitol Hill, trying to fight, decrease in reimbursements that are coming off the backs of private practice and has for years. We have some very stalwart serviceable, intelligent, and driven educators as well that are totally engaged in the PT world.

When we think about sheer numbers and the finances that drive the protection of our profession, it’s private practice. If all of a sudden, there are no entrepreneurs in our blood anymore because the barriers are too high. I fear that what we have enjoyed and our love of the game might not be there in the next generation because the barriers with debt are too high. My last message to the owners is if you want to live a legacy or leave a legacy to the next generation, it’s time to take the student debt seriously, not that you have any anymore, but every single one of the PTs that you work with, they do.

If you want to leave a legacy to the next generation, it’s time to take student debt seriously. Click To Tweet

It's not necessarily going to get better. The costs for education have outpaced inflation 2 to 3 times over the years. I don't know if it's going to get necessarily significantly better. We have to do what we can on our end to help that.

That's a great take-home message. I would look to see that the APTA is going to make some wonderful strides there but they're not going to do it without us. We, as owners, got to do all we can do.

If people wanted to get in touch with you and maybe talk to you about it and what you're doing, get your insight, how do they reach you, Bart?

You can shoot me an email anytime. It's Pick up one of our books. They're cheap. Take a look at it. It's a great financial solution and probably the best ROI, in my opinion, that any of our new grads can pick up.

That's a huge help. I'm so glad that you've formulated a book around that to address it because I don't know if there are any other books out there like this now that share this wisdom and the statistics that you brought up. Thank you for doing so. Thank you for shedding light on that.

It was a journey and something that I hope from a personal basis, a great way to give back to our profession.

Thanks for taking the time to be on the show as well.

Thanks for inviting me, Nathan. This has been great.

Talk to you later, Bart.

 Important Links:

About Bart McDonald

PTO 160 | New PT DebtBart McDonald, PT, MPT, ECS, FMSK, is the President and owner of Superior Physical Therapy. Bart began his career at an outpatient clinic in Montana. He later worked at Bannock Regional Medical Center.

Bart started Aspen Physical Therapy and later decided to open his own clinic, Superior Physical Therapy in 2008 which has grown to four clinics in southeast Idaho.

Bart graduated with his Master’s of Physical Therapy from Emory University School of Medicine in 2000. He specializes in knee, shoulder, and spine rehabilitation, Electromyography and Nerve Conduction Study testing and is ASTYM certified. He is Board Certified in Clinical Electrophysiology and is a Fellow in Musculoskeletal Ultrasound.

Bart grew up in Nampa, Idaho, is married and has three children and one grandchild. When he’s not working, he is spending time with his family, water skiing, or downhill skiing.

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PTO 159 | Successful Partnerships


How do you create successful partnerships for your business? Nathan Shields presents Eric Miller, the owner and Chief Advisor of Econologics Financial Advisors. Eric talks with Nathan about specific steps you need to take to put you in the best position to succeed in your partnerships – from aligned purpose and goals to gifting hard equity. Join in the conversation to discover critical steps that need to be taken to ensure you meet both parties' goals and sidestep the potential pitfalls. You wouldn't want to miss this episode!


Listen to the podcast here:

How To Create Successful Partnerships With Eric Miller Of Econologics

I've got Eric Miller on with us, my favorite financial planner from Econologics. Eric, thanks for joining me again.

It's my pleasure. Let's do it.

We've talked a number of times here over the past. One of the topics that came up that I wanted to pick your brain on was about partnerships. A lot of owners might go into ownership independently or individually. Some of them might have a partner that they are considering opening up their first clinic with. Nonetheless, it's an invaluable thing to consider all the steps that are made for a successful partnership. This is a marriage. It might be as difficult as a marriage. It could cause as much stress because you're spending as much time with this person as you do with your spouse.

It’s probably more. The work is 7/10 of your life when you think about it. When you have a partner in your business, it's probably more so than your actual spouse because of the amount of time that you spend doing work.

You don't want to take it lightly and there are a number of things to consider. I'm glad we're having this episode because we're going to break down a lot of the things, if not all the things, you need to consider about a partnership. How to formulate one? What should it look like? What should someone consider when they say, "I want to partner with somebody. What do I do?" How would you first address that question?

There has to be an alignment between you and this other person. When I say alignment, it's like a marriage. It doesn't work if it's built on the wrong reasons why you're getting married. If it's just for looks, that's not always going to be a good thing. It's the same thing with a business partnership. You have to look at it from, "Do we have similar purposes? Do they have a purpose to whatever the purpose of the organization is or whatever the purpose that I have for the organization? Are we on similar purpose lines here?"

You can imagine if one person is like, "I want to go this way and you want to go that way," it's eventually not going to work. It needs to start with, "What are the purposes? What are the goals of the organization?" They have to be in alignment. I can tell you this from working with practice owners for many years. I have seen good, bad and awful partnerships.

There's one where they were not talking to each other but only through their attorneys. That's bad. Just like a marriage doesn't crumble overnight, a partnership has to be something that you're constantly creating. To that degree, you need to have some fundamentals when you start off with it. The goals of the partners have to be very similar like, "We want to get to seven practices and do $7 million in revenue a year. We want to eventually transition out and sell to a corporate group."

Whatever it would be, it has got to be pretty similar. You can imagine if one person is like, "I want to get to seven practices and $7 million," and the other person is like, "I'm good for two and coast along." That's not going to work. You have to build that alignment in the front end. There has to be some alignment on finances too because money is a big component part to partnerships. There has to be some synergy there as far as, philosophically speaking, similar viewpoints on the subject of money. That one person is like, "I need all this money right now." The other person is like, "We have set aside. We have to do this and this. We can't just rip all this money out of the business."

PTO 159 | Successful Partnerships
Successful Partnerships: Any relationship can be fixed.


As you bring that up, I'm thinking most marriages fall apart because of financial issues and financial strains. Wouldn't you say that could be the same issue with most partnerships falling apart in how to appropriately spend money?

It usually falls apart because one person thinks that the other person is not pulling their weight. There's a lack of exchange there. It has to be very much written out as far as who is doing what in the organization. When you're looking at a partner, you want someone that can complement what your strengths are. Let's say that you're a good technician and you're very good at practitioner work, but you're not a good executive. Maybe you want to bring on a partner that has those skills. It's building that but there has to be that alignment to start with.

Of all those practice owners that you've talked to that are in partnerships, what would you say is the percentage of those that have been successful versus those who have not? I would think it would be a large percentage of those that have not.

It always starts off good. They're happy. Like a marriage, one thing that ends up happening is you try to put the partnership on cruise control. You stop creating, communicating, spending time with each other, and doing all these things. All of a sudden it's like, "Maybe I don't like that person as much as I did. Why do I need you?" You have to make sure that you guys stay in communication.

I have a partner. We talk every day but we have a dedicated hour every single week where we go over the basics to stay in communication of what the direction of the organization is. What are our goals? What are the purposes? What are our targets? That way, we're all moving towards a common objective. It doesn't mean that there isn't friction or you're not going to have upsets and any of these things.

You have to have someone that has an owner mentality that can take responsibility and isn't just doing it for a paycheck. I can give you stories of that happening where you have one owner that wants to expand and the other owner is like, "I just want to come here from 9:00 to 5:00. When it's 5:00, I want to check out and that's it. Give me my percentage of the profits." That's not going to work.

I loved how you brought it back to value alignment and goal alignment. What worked out with Will and me is that not only did we have similar goals, we wanted to prudently expand and whatnot, but we also had shared similar personal values. A lot of it ties back to we are like the same kids within our family and our fathers were very much alike. We didn't learn this until later on. I don't necessarily think that partners have to go this far but personally, we shared similar value sets. It's because of that and the constant communication that we shared that we enjoyed being around each other. Can you imagine being a partner with someone who you don't enjoy being around with? That would probably be a recipe for failure.

It's going to fail at some point in time. If you're enduring right now like if you've ever seen those relationships with people who are together just because they can't imagine being apart from each other is too painful, but they're just enduring. You don't want to do that. Any relationship can be fixed. I would recommend to people that if you haven't sat down with your partner in a while, make sure you do that. Get in good communication with them and find out what's going on like, "What is the direction that you're going? Why don't we map something out?" It doesn't take much to imbue some life into a relationship.

Once you begin that communication cycle, you can start fixing a lot of things, but it doesn't start until the communication begins.

A partnership has to be something you constantly create. Click To Tweet

You've got to be able to take responsibility. If there is some friction and upset, don't just sit there and be right. You have to take the other person's point of view. That's the only way that any conflict is going to get resolved. We're getting into conflict management right now, which is a totally different episode. We can do that as well. To your point on that alignment, it starts with common goals and purposes. You got to have some affinity for one another and share some genuine likeness. That's important.

What if it's like I'm an owner. I'm not necessarily interested in giving up 49% or 50% of the business, but I've got a clinic director that has been with me for five years. He or she is amazing. I want to reward and incentivize them. Maybe I want to open up another clinic and they have some form of partnership at that point. What are the things to consider at that point?

You have to come up with some transition plan for yourself and decide, "How am I going to transition out of this business?" There are different methods that you can do. There are seven different ways you can exit out of a business. One of them is doing either what's called a buy-in or buyout. I can go over the specifics of that.

A buy-in would simply be where I have 1 or 2 associates or clinical directors that would like to start buying into my practice. They're going to buy-in based upon the value of the business. That is one method where a lot of people have been able to take some risks out of the business for themselves and also liquidate a portion of their business and get some cash if they need that by allowing someone to buy-in.


That is a method to be able to bring on someone. Let's say I have a practice that's worth $2 million. I want to have someone buy-in 25% of my business. They would have to come up with $500,000 to be able to do that. Most associates are not going to have $500,000 sitting in their piggy bank to be able to do that. You have to be willing to seller finance at that point.

The benefit to you is that you're going to get the same amount of cash that you've been getting even before because the profits are going to be paid back to you, except you're going to be getting it at capital gains tax rates because it's going to be coming back to you at a lower tax rate than what you're getting. That would be one method of identifying someone and then saying, "I'm going to let you buy into this business for a predetermined valuation."

That's giving someone some hard equity. You're talking about hard equity options. What if it's not a hard equity option and someone is like, "Maybe I don't want to go that far and give them a percentage of the company." I hear many therapists talk about how they're partners in their company. When I talked to them, they're just getting profit-sharing. There is a way to be a "partner" without necessarily giving up hard equity of the business.

You can designate money like executive bonus plans or something like that, which the owner is saying, "Based upon our profit of the business, I'm going to share the profits with you with selected people in the organization." Usually, it's a management team. It's like, "If we're profitable, I'm going to give you 1% or 2% of the profits and this is the arrangement that we would make."

That way, if you're an owner, you don't want to give up any of your equity, but you want to reward and tie executives in so that they're motivated based on the profit of the organization. You can structure it that way and there are 1,000 different ways to do that. It has got to be on a percentage of the actual profit of the organization, not the revenue. That's certainly a method that you could do as well.

PTO 159 | Successful Partnerships
Successful Partnerships: You have to come up with a plan on how you'll transition out of your business.


That's the thing that Will and I came up against as we were trying to figure out how we can incentivize and reward some of the clinic directors or management team members that we had. We went to a lawyer. We said, "We want to do some partnerships and maybe some profit-sharing." They were like, "How do you want to set it up?" We were like, "We were hoping for some guidance." The lawyer said, "You can do it in a thousand different ways. What do you guys want to do?"

I'm glad that we're talking a little bit about considering the difference between hard equity and some kind of profit-sharing model because there are a thousand different ways to do it. When it comes down to what you want to put in writing, the calculation has got to be the same so everyone knows exactly how it's figured out.

I've seen some people do that with some success as well. Anytime you are trying to reward people that are producing for you, it's important that you incentivize them in some way. Trying to get people tied into the actual business though, there's a risk to that but at the end of the day, it's probably going to be a little bit more successful.

I know you recommend getting a business attorney. Find a business attorney if you wanted to do this to write it up and spend the money that it takes, especially a business and acquisitions attorney that specializes in this.

You would 100% want to work with a company that specializes in how to bring it on physical therapy, someone that has done it and understands the agreements that they're going to need to be in place. When you bring on a partner, now you're going to have a business entity that you guys are going to share. There have to be operating agreements, management agreements, and all these agreements that need to now be redone to include this new partner. You need to amend all the stuff.

You need to make sure that you have an attorney that has specialized in mergers and acquisitions in your industry. There are companies out there that specialize in that thing. They would perform the valuation. Most likely, they would determine what the value of the business would be. They're going to create all the legal documents to be able to do that.

They'll run the numbers as far as, "This is what the profit would be entitled to for the new owner and all of those guys." They'll help run all of those things. It's going to cost you $5,000 or $10,000 to do something like that. A handshake is still good like, "I'll do this." You have to make sure you keep the actual agreements in place for sure.

What a lawyer is also going to help you figure out are some kinds of clauses. The relationship between Will and me when we finally got an attorney was such that we had an agreement as to how things would end or when conflicts arose, this is how we would address conflicts. It's called a shotgun clause. If you're going to try to buy me out at a smaller amount than its valued, then I had the ability to turn around and buy you out for that same amount.

It also had conflict resolution built into it because we were 50/50 partners, which meant we had equal say. Our lawyer broke it down like, "If you guys are stuck on an important issue, who is going to be the tiebreaker?" We had to designate an agreed-upon person that we both trusted to be the tiebreaker. If we wanted to go to another level, we wrote out to someone else as well. It helped us with breaking down so we knew well ahead of time, if we ever had issues, this is how it was going to go down.

Reward people who are producing for you. Click To Tweet

How many times did you guys have to do that?

Never, but I remember exactly what would happen if we needed it.

The thing is when you put something in place like that, it almost lessens the likelihood of that uncomfortable occurrence will ever happen. When you take responsibility for doing something like that, you lessen the likelihood that something bad is going to happen to you or you're going to have an unfortunate situation occur. If people don't take care of themselves, what's the likelihood that you're going to have health problems? It's probably pretty high. It's not rocket science. It's just observable.

To your point, these are what these agreements are there for. What happens if I die prematurely? What happens when somebody becomes disabled? What happens if someone goes off the deep end? How was it written out? That's all written out in the members' agreement and operating agreement. All those things are written out. If you're bringing on a partner, you got to make sure that that gets amended, updated and reviewed, both people agree upon it and it's executed.

More often than not, a lot of the issues that I see arising, there could be a lack of communication and one person is not feeling like the other one is pulling their weight. A lot of times, it's simply one person who wasn't in a happy marriage or at the beginning of the partnership is no longer in that happy marriage. Because of the relationship to the partnership, that causes things to get unraveled. Whether it's marriage, drug abuse or alcohol abuse, all those things can affect negatively on the business. Addressing those with a legal document ahead of time makes it so much easier to unwind when necessary.

There will be personal behavior clauses in there as well. If someone is not fulfilling their end of the bargain, then the other person has the right to buy that other person out. All those things are part and parcel of that. It's key that you have those things. Make sure that you have an attorney. Don't just grab something off from and do it. Make sure you have a mergers and acquisition attorney that does that for you.

You can have someone to buy-in. We talked about partnerships, to begin with, if we have a clinic director or someone who we appreciate in the organization and we want to do some profit-sharing with. Talk to us a little bit about the buyout stuff that you brought up.

We'll talk about two things. We'll talk about the buyout and then granting people ownership that you feel deserve it, that they have sweat equity.

Some people might not want to say, "I want you to buy out." They might say, "I've been with you for fifteen years and now you're asking me to buy into something that I've helped you build from the ground up." In those situations, you might want to gift some kind of stock.

PTO 159 | Successful Partnerships
Successful Partnerships: Make sure you have an attorney that specializes in mergers and acquisitions in your industry.


There may be instances where the value to you as the owner is I have a person here that has been with me for 10 or 5 years. They've helped me build this thing. I want to reward them. I want to be with them for the period of time that I own this business. I don't want to make them have to come up with the money because I feel like they've earned it already for the value of the business.

What do you do in those instances? There are a couple of things you can do. You can gift them because everyone has the ability to gift money or assets to somebody over their lifetime. You can gift them a percentage of the value of the company, "I want to gift them 15% or 10%," whatever that would be. You would need to get all the same agreements in place. You would need to make sure that there are member agreements and operating agreements because now they're going to be a partner with you. As far as gifting them the shares, you can do that. The negative thing is that it would take away from your lifetime gift exemption that you have, whatever that amount would be, but there would be no negative tax consequence to them. That would be a hell of a thing to do. I've seen some owners do that.

Would the merger and acquisition lawyer help you with something like this or is this a CPA type thing?

It’s going to be both. A CPA is also going to be needed. There need to be agreements that are created and a legal document that says, "I'm gifting this percentage of the business, which is valued at this to this person." I'm sure there's a lot more to it, but that's essentially what you would do.

It's important to figure out how that's going to affect you and them. It's a very nice thing to do that they're not going to get taxed on this gift that you're providing them, but it also decreases the amount of gifting that you can do to other employees or even to your children, grandchildren or wife in the future.

That's the downside to it. If you don't want to do that and you still want to be able to give them a percentage of the company, then you would do what's called a grant. It's a little different and nuanced. This is how I got part ownership of our company in the beginning. I got a grant of stock. What that means is I got, let's say, 25% of the company granted to me. I did have to pay tax on the value of whatever that grant was. That's fine because I got the value of it. I just have to pay the tax on it. It was a big tax bill but that's what the person would be on the hook for.

They would be entitled to that percentage of the profits. Maybe in the first year, the profits that you get could go to Uncle Sam. After that, you're getting a percentage of the profits and you don't have to pay for the value of the business. I've seen that done probably at least a dozen times for people that want to reward someone that has been with them for a long time or want to keep someone tied into them and give them the sweat equity. It's a fabulous tool.

Hopefully, the person who was granted that stock recognizes that they are going to have to pay taxes on it. You want to be upfront about that, but they recognize that it's still a gift. It shouldn't be an upset for them to consider that they have to pay taxes on something that came to them for free.

If someone has a bad reaction to that, that's a bad indicator right there. You may want to rethink that. That would be a very simple way to give that sweat equity to someone that has been with you for a long time and tie in a top performer that you think can maybe take over the ownership or help the practice grow even more. Granting of stock is a cool tool.

You can't build a business on chaos; you have to have something in order. Click To Tweet

That's not a way to buy out because then the owner doesn't walk away with anything. It would be more of the buy-in. Have you ever seen a situation where the employees buy out the owner and then take ownership of the company? Have you worked in that scenario?

There's something called an Employee Stock Ownership Plan. It's called an ESOP, which is a method where an owner can get to take shares and have the actual employees buy-in. It's almost like a profit-sharing plan, and buy-out the owner that way. It's super expensive to set something like that. You need to have at least $1 million EBITDA to be able to do something like that. A lot of practice owners have that EBITDA.

It would be as easy to have an associate to maybe buy you out and that would be an easier method. You still may have to carry a note in that scenario where you do a buy-out. Let's say you have 1 to 2 associates that want to buy you out completely. They say, "We're going to buy you 100% out. The agreed value is $3 million. We're going to pay you $300,000 a year for the next ten years at a 6% interest rate." You can do that. That's a buyout method. You just got to make sure they know what the hell they're doing.

If you're looking at maybe granting some kind of hard equity, then you're looking at a buy-in option granting or gifting. If you're not looking at granting this person actual stock in the company, then you're talking about profit-sharing models that could be rather diverse. There are many ways to cut that pie. All in all, we're also saying to start with the basics. Let's go back to building the foundation. Make sure the values and alignment are there, the goals are agreed upon, and everyone is in good communication. Start with a mergers and acquisitions attorney and go from there.

It seems like a lot. If you start there, all the methods, techniques and technical stuff can be figured out. The methods are an important thing. Having someone that has done it before or has some experience with it can give you the pros and cons of each of these different methods. Spend some time on it. Don't make a rushed decision. Think about it, look at it and make sure that it's beneficial for you. When you do sell a portion of your business, you are giving up that percentage of profits to your household. Make sure that you understand, are you financially ready to be able to do that? Are you doing this to expand or buy you more time for yourself? What's the reason?" Think about the reason that you want to bring out a partner from that respect.

The clinic owners that have done the best from my personal experience are those that have successfully navigated this. Either with profit-sharing or getting some hard equity buy-in, they have somehow been able to bring on partners and expand their practices without them having to do it all. There's something to having partners in each of those locations that incentivize that person that's on-site to build it and make it successful. Those are the people that have been most successful in the physical therapy owner space that I've seen.

You're right, which is another model too. If you're looking at different locations, partner with someone at that location. Maybe you own 51%. They own 49% in some models. Maybe that's another way that you can expand as well to give ownership of that particular practice.

Some of the larger privately-owned clinics that I know do exactly that. That person on-site might have 49% or less of the business, but they get a relatively average salary on top of maybe monthly or quarterly distributions. Their job is to run that clinic.

You run the practice. The parent company is going to do a lot of the marketing, collections, billing, HR and all of that. It's a good model if you want that owner to focus on the management of the business, production, patients and those kinds of things. It can work.

PTO 159 | Successful Partnerships
Successful Partnerships: If you want to grow and give your partners a percentage of the company, you can give them a grant stock.


If people have more questions for you about partnerships, how would they get in touch with you?

Go to and you can download a ton of information that we have. Transitioning is something you have to think about all the time like the transition of your business. The moment that you start your business, you should be thinking about your transition. There are different time frames. We're going to create a checklist that's like, "If you're going to exit out in one year, these are the things you should be looking at. Three years, this is what you should be looking at. Five years, these are all the things you should be looking at." That way, you know you're on the right track to get an exit that is going to create maximum value for you and your household, which is what everyone is shooting for.

Hopefully, people take advantage of that because I'm pretty certain that most owners are thinking, "I want to exit out in 3 to 5 years." They assume it's going to happen and don't need to know that they need to prepare for it. That's why you're making a checklist.

From experience, it's not good to have no plan and you want to transition out in 90 days. That's bad. You're not likely to get the value that you want for the business. There are a lot of people though that end up saying, "I'm done with it. I want to get out." They ended up selling for some discount of what they possibly could make. It's not anywhere near what the practice could be worth. That's sad. I hate to see that but it happens more often than not.

Most of the time, it's putting some organizations. Put your policy procedures together and that can dramatically increase the value.

I don't think people realize how much that can increase the value of your business because it is the point of expansion right there. You can't build a business on chaos. You have to have something. It doesn't take much time. There are thousands of resources and materials out there. I can't express the return on investment with hiring a good consultant because I've seen it. I've seen people that have hired consultants and your profit margins increased by 2%, 3%, 4%, 5%. It's the value of your business because it's based upon a multiple of the profit that increases it by hundreds of thousands, if not millions of dollars.

That’s a good plug for me. I appreciate that.

I did that on purpose.

Thanks for your time. I appreciate it.

It's good to see you.

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About Eric Miller

PTO 159 | Successful PartnershipsEric Miller has been in the financial planning industry for over 20 years. He’s a co-owner of Econologics Financial Advisors – awarded an Inc. 5000 honoree for 2019. As the Chief Financial Advisor for the firm, Eric has had the good fortune to have over 10,000 financial conversations with private practice owners in various healthcare industries and helped guide them into a more optimum financial condition using a proven system.

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PTO 158 | Let Go Of Someone


Handling a team is challenging, especially when there are members who don't cooperate. So when push comes to shove, how do you let go of someone? Today, James Savas, the Deputy Chief Executive Officer at Hands-On Diagnostics, breaks down the process for us. James talks with Nathan Shields about how business owners should handle termination or resignation. It begins with mindset, clear reasoning, role-playing, and documentation, documentation, documentation! Taking on the role of leader and holding team members accountable can be difficult, yet it is necessary for the growth of your business. Tune in and let go of someone as clean and simple as possible!


Listen to the podcast here:

How To Let Go Of Someone Successfully With James Savas

I've got a returning guest, James Savas, who is an HR and Recruiting Specialist. He's working with Hands-On Diagnostic services as well as other business owners for their HR and recruiting issues. I'm glad to have him on. James, thanks for coming.

It’s great to be back.

If people want to learn a little bit about James, we won't get into it but we did an episode in 2020. What was the topic that we discussed, do you remember?

It was recruitment a little bit but the front end is onboarding staff. We touched on the operating side a little bit.

We had a follow-up episode about getting rid of the dead weight and that stuff. This is apropos that we talked about this topic because we won’t get into how to successfully fire somebody or offboard somebody. We are going to talk not just about firing somebody but also what to do when someone resigns and how to make that successful for you. I would highly recommend that the readers go back and read those two previous episodes because these will all be somewhat sequential in nature.

When this topic came up amongst my mastermind that someone said, “I've got an employee, a physical therapist who's resigning here in the next couple of weeks.” Another member of the mastermind said, “It would be valuable of you. You recommended that you should do an exit survey.” I thought, “Something we haven't talked about on the show before is exit surveys or exit interviews if you will, however you want to call it. Who should I talk to about properly offloading somebody?” and I thought of you.

Thank you. I appreciate it.

Where do you want to start with this? We talked a little bit prior to push and record about the mindset. Maybe that's a good place to start. There's always that inkling, “I need to let this person go.” Can you help us walk through where someone should start considering and how to consider letting someone go in the first place?

The first thing is understanding, acknowledging or re-realizing that you have a partnership with this person and you brought them into your company, right, wrong or indifferent. They are your great hire and deadweight but they are yours. A general statement in the personnel period is to take the viewpoint of responsibility because ultimately, you have them there.

As an employee, take what your management says and apply it. Click To Tweet

I'm not saying it's necessarily the owner's fault that things don't go right. However, if that's the viewpoint the owner has as senior management of like, “Why didn't they make it? Why didn't this employee make it?” That's a great mindset for you because then you go into correction, quality assurance yourself, your processes when they came in, on the training measurement when they were there and on the way out.

It is more enlightening to me when staff is on their way out for any reason. Enlightening yourself in your process because then you will see what you lacked, what you did right, and what you did wrong because again, that's your partner. You brought them in, you cared for them at some point and you pay them some money. Now you’ve got to end it. That's a quick mindset point I wanted to comment on.

That's valuable that you have to recognize where did things fall off. If you are not using it as a learning experience to improve, then you are setting yourself up to have the same issue over and over again. What could we do differently during the hiring process? What did they come with? What could we have vetted better in the recruitment stages, hiring process and interview stages? How could we have seen the red flags, you name it?

As you said, we brought them on, we were excited about them, and we vetted them appropriately but maybe our training processes could improve. How can we set them up for success? Essentially, your job as the leader is to set up your teammates for success. How can we improve that foundation that they can build upon? Did we provide them the appropriate expectations ahead of time so that they weren't surprised by anything that came up? Were they aware of all the policies that were expected of them ahead of time? If we didn't talk, can we do that differently?

No matter what has happened, we are in this position where they have either resigned or we recognize that maybe this is going in the wrong direction and we need to consider firing them. What I’m trying to ask is how do you decide if someone needs to go? It's time to stop all this and it's time to let them go. You, as an Owner, have been on the fence for a long time, how do you finally make the decision it's time to leave?

I don't pretend to give legal counsel. I just want to make sure that that's communicated. Take this from expertise and professionalism and what I have done with these own hands in my years. I want anybody that is on the HR personnel universe will tell you that documentation, the same way when you are treating a patient, reports, emails, and funkiness that have occurred, the good, bad, and the ugly. At this point, you want to go the ugly-ish. It's got to be data-driven like a physical therapist.

If you have an occurrence that on March 5th, X, Y, and Z happened, you have statistics or KPI that point you to where they had these targets to achieve and never have achieved them. For the last six months, they have not achieved them. Three major indicators or evaluators would be reported in their files. I don't have it verbatim but there's an old adage that if you investigate the employee, investigate but you have about an inch thick of a personnel file. We all use electronic stuff these days but you get the idea that if it has been a while and a few reports, let's look into this guy or this gal.

It’s the day-to-day data, reports, statistics, KPIs, trends, and their arrival to current and in between. If you make it non-emotional and no opinions are allowed. You want to get raw on the legal side, it's no opinions and no emotion. “Jack Smith was late these days. He failed to achieve the targets that he knew they had. We had our review and we went over it. He signed that he did it, bye.” That's it. Those for sure are things to evaluate.

It helps as I'm talking coaching clients through this when we can get as objective as possible and that's what we are talking about. Objectivity helps the situation. Subjectivity and emotion are not going to help. It's going to be he said, she said, it's going to get emotional, back and forth. It's not going to be a good learning experience for the person and the employee who is leaving. That's one thing owners don't do enough of is documenting the infractions so to speak. It’s simply writing up, “This is what happened and this is why it's an issue.”

PTO 158 | Let Go Of Someone
Let Go Of Someone: Build a system coming from the top down where everyone freely writes up comments about things.


I would take it a step further, which helped me and my clients in the past to determine and define, which value of the company they are going against by performing this action. If they were late and weren't meeting their productivity measures or the KPIs, those are infractions. Is it professionalism, integrity, accountability or empathy? You name it. What value are they going against? When it's a value-based decision, this person is not upholding this value. That also makes it objective and clear.

I fully agree and it's interesting because we will probably get into what form of documentation do you need or what checklists but on that point, which dovetails the two points. Ideally, reports are written or other reports call them statements. It's happening all the time and there's no particular pressure or no funky viewpoint about it between the staff. If Samantha is late, they write Samantha up. Not because I don't like Samantha.

It’s because she was late. That manager observes, following through with a policy or procedure, and documents it. That’s all. It’s clean, no opinion. It’s just, what happened is, I thought. In the same way, it's the same thing you are doing for patient incidents. When something happened, write down that Mr. Smith felt that he got hurt from that ultrasound. Did he really? Maybe not. Is it your fault? Maybe not but he felt that way, so you write it down.

Ideally, you do have a system that comes from the top down that everyone freely writes up comments about things. I will tell you something. That's not easy to do but if you can pull off at least a management group or your top guys and gals that back that viewpoint up, then what you have is what a sane environment you created. If you see a report occur and the report itself looks opinionated, nasty, and she never, I'd investigate the writer of the report but that itself tells you something.

If you can get your management and up, it could be one person, office manager or the billing manager in smaller offices but if you get their backup on the report writing, you are golden. If that's not possible, you are small or you can’t do it with, which dovetails to your last point, I would say at least every six months or every year, an official evaluation or whatever we call them an employee review.

At least, if the reports can happen for whatever reason under the sun, then the reviews or the evaluations. In those, exactly what you said, there are categories of viewpoints or a backup of overall purposes of the company. How does the employee align with the purposes, good, bad and indifferent? Why? It’s statements that you, Manager or Owner are writing that. If you want to know more about that type of document, it’s official. The employee signs. That review signs that they read what you wrote. It's all handwritten and right there. If not, which is again, you should look to do that if you can, then at least annual and biannual review.

That's where many owners fall short or don't feel comfortable as to, number one, have accountability meetings when issues do arise. As physical therapists, we like to be liked. That's the general personality of physical therapists. If we are going to hold someone accountable, now we are the “bad guy.” We don't want to have that feeling of confrontation in the clinic. However, that's the perfect way to allow people to walk all over you.

To be a leader, you need to hold your ground, set the boundaries, draw the lines if you will, and then have those accountability meetings and have regular meetings, one-on-one meetings with your team. They want that and deserve that. They want to know how they're doing. They want to know what their scorecard looks like. Allowing them to have an assessment and a review is appropriate.

We talked about the purpose. We also consider those value-based assessments. We would list the values and, as you said, “How did they exemplify the values over the past period?” We had to go both ways and they would fill this form out themselves, and then the supervisor would fill it out as well. The assessment interview itself, they would start like, “This is how I have shown these values. This is where I need to show improvement. This is what I'm going to do in the next period.” The supervisor would say, “Thank you. I agree. This is how I think you've shown those values. This is where I think you need improvement and this is what I need to see from you.” As you said, we both sign off on that.

Care about other peoples' success. Click To Tweet

That's just an example of an accountability interview like you talked about, but having those in the employee files as well as, “I'm seeing a trend of you not coming in early. Let's go to productivity statistics specifically. We have an agreement that you need to see 60 visits per week and you have been routinely at 50 visits per week, and I'm not seeing you do anything about it. What do we need to do about it going forward?”

Make sure that's written up and there's an agreement. Depending on the severity, and then maybe they sign off on it or not but you have to have those things to make it easier to let them go if that's the case but it also provides them the foundation to grow, understand, and invite them to, either join the team and say, “This is the team over here and these are the expectations to be part of our team, or you need to find another team to play with.” That accountability means that can be huge. We set up an employee file.

Let me give you this question because this happens more often. They do okay. They don't speak negatively of the business. Their performance is on the border most of the time. You ask for improvement, and maybe they improved for a couple of weeks, but then they go back again. How do you decide if you should keep that person or not?

It's a matter of, are they willing employees or are they something else? Are they an employee that takes what you say and applies it, that takes your direction and changes? When you give them orders, directions, viewpoints, policies, they understand it and do something with it or about it. On a low level, would they be able to go? I used to run a drill on the hiring side with the new employees. If you gave them a specific order at a restaurant, would they understand and duplicate all the little, “Mayo on this side and mustard on this side,” or whatever?

Do they understand your communication and can they operate based on it? Are they willing? Does that happen? Yes or no? “No, they don't listen to me. They do an average volume of work, or whatever their area is.” Are they willing or not? A non-willing employee comes in a few different shades. They can be defiant and be like, “No boss.” They should be out the door. That's just who they are. If not, you don't need that very long.

It's easy to fire them.

Yes, exactly. They let you know that you should fire them or there's a behind-the-back guy. The back-coverty like, “Everything is fine?” Big smiles but intentions are, “What?” In the statistics, you will see a division or area that it's not going well or we can't hold staff here. People are unhappy here or there are complaints. Tracking that down, it’s Peter or Sally. Either you have a willing person that responds to correction, communication, and changes as a result of that can duplicate and understand basic stuff needed by you, by the boss, by the managers or not.

If you can decide that they are willing, if that's assumed, and let's be truthful at the front end, do they have a general IQ and aptitude for the job? Generally, they have to ask to be assessed on it. Assuming those two things are valid that they are willing, they have a fair intelligence for the position, and they are not doing well, then the answer is they should correct with correction. They should change their operating basis. It should be an even keel, peer-to-peer, down to their level of conversation about, “What's going on? What are your future plans? How is it going here?” I wouldn't even necessarily document that at that point. It’s a conversation with your partner that you brought into this group that is not working out well.

If they are a willing person, generally good, emotional state, and so on, they will and you will find out what it is. You will find out that, “It's a rough year. It’s COVID. I just broke up with my girlfriend or my boyfriend.” You might get that stuff, too and you might get something else but that's through communication. That one if not handle the problem, you get the root of it, parts of that roots or pieces of the roots and there you go, “I get it. Things suck for these reasons. Can you do the job that you were hired to do?” “I guess I can, boss.” “If not, I don't think it's cool. Let's look at some other options here like part-time, you are in or goodbye.” You have to first evaluate that you’ve got somebody worth it, the production flow or are they are really not worth it. That's the first point.

PTO 158 | Let Go Of Someone
Let Go Of Someone: Letting someone go comes down to documentation.


What I see in owners oftentimes is they haven't had held somebody accountable in the past and they don't know how to start doing that now because that is a different culture. It's going to be a surprise to those employees that were finally holding them accountable. I did this in the past and you didn't say anything wrong. I'm learning to become a better leader. I decided that I'm finally going to sit down with you and talk to you about it. They have to get comfortable and maybe they don't also know how to hold that conversation.

I like how you brought it up like, “How's everything going? Are you happy here? Is there anything else I need to know about? Now, understanding that we will clear the air. Let's look at your statistics. Things aren't going in the right direction. You are not producing what the expectations are. Are you aware of what the expectations are or you are not? In order for us to be productive, helping our patients, and profitable as a business to sustain our survival, you have to see this many patients per week. Can you do that? Yes or no? If not, let's move forward. If you can't, I don't know if this partnership can work much longer. How are we going to figure this out?”

It doesn't have to be, “You just need to see more patients.” That's not going to go far and as you said, this is a partnership and you have an agreement between each other that you have established but you need to understand that both parties need to hold their end of that agreement. That's what that meeting means. It's valuable to, number one, start having those conversations.

If they still aren't able to come around, still not doing things, other patients are falling off left and right, they can't keep the patients in the door when they come in or they are leaving after the 3rd and 5th visit, it's time to have that conversation. What kind of mindset do they need to have when it’s time to part ways?

The owner?

Whoever it is.

In my experience, PT owners and other professionals as well but they are caring. That's why you’ve got into the field you did, among other reasons. You care about the staff. When you are at the point where you are having those conversations like we just said or get further into it like it's going to go, “Tomorrow you are gone or now you are leaving.” When you do it from the viewpoint of care, the same way you might have a tough conversation with a patient about it doesn't look good.

In PT, we don't have those conversations but you get the idea that it doesn't look good here. It's the same thing that you care about that person and you don't change that. You don't suddenly become a bully or something else. You are still that guy or gal with those purposes and partnerships with those agreements and you care.

Working relationships are all about trust. Click To Tweet

I have even used those words and guided owners to use words like, “I care about your success. I care about your future. I care about what we have done here. You are valuable to me in this way or these ways. You happened to be valuable.” Part of it has to be acknowledging the good, the agreement, and partnership so that care things should never go away. The ax comes down and you have to put your other hat on, and now you are the mean guy. It's not at all. You are the same person that had the same question. It's a viewpoint like you said, shift.

That's exactly what I asked. What mindset should you have going into the firing, per se? I like to avoid the details unless I have to and just say, “We have had some conversations and it seems things aren't going the right way.” Shaun Kirk who is a mentor of mine was like, “It's just not working out.” That was his famous phrase. I like to give them a little bit more and say, “We have had conversations in the past. It's time that we part ways. I care about where you are going to go but honestly, today is going to be your last day,” and go from there. What do you recommend in those conversations? What kind of wording do you use?

That is the phrase. Shaun is right. That is the blandest way to say, “You are out. That's it and it doesn't necessitate any other accountability but we are not a good match. It's not working out.” Those phrases are globally gray and okay. I like those, generally speaking. It's not going to work every time, I get it. I have had people and I'm sure some of your owners had people that go, “But I deserve to know, I want to know,” or whatever it is. Number one, I would always role play, by the way, prior to. Number two, always have somebody in the room with you.

A witness, the good cop or the bad cop, there are a million reasons why that's a good idea. Roleplay with that person and say, “We are going to do this. It's going to be maybe sticky. She's not going to like it.” I would be real with that manager. Ideally, it's the Area Manager and you, the Owner or the two owners, whatever. That is a good bland thing to say.

I had gotten into a conversation where they demand to know or something like that, and I have held my ground that, “I don't have to give you a reason other than what we have gone over in our last talk or other than what we have gone over in your evaluations. I will give you a copy of that if you would like. Its statistical point, I can give you a copy of the graph if you would like. If you went down, that's evidence here.” That's it.

If it gets heated, I have gone that direction where, “I don't have to tell you and I will give you some documentation if you want.” If you are going into it with the idea that it might turn into a legal issue for you like they are leaving, either way but it might get sticky, they might get you for something. Maybe you are not sure or they weren't a good employee but you kept them on because you had nobody else or whatever, it's going to go bad.

Again, I'm not the Owner of your clinic with the money or the lack of money but I would always have available a check on hand. I have done that before, too. If it goes great, maybe no check but you have it there, “I give you a week's pay.” A week's pay is planning for that general employee, maybe a payroll cycle of two weeks max. That's generous. I have done that not just what they worked up to that day because you owe them that, of course, but I would give them a little bit for their troubles and that thing. That's a little ammo, just in case.

I feel this way personally that if I'm going into that conversation and they are surprised like legitimately out of left field surprise, “Where is this coming from,” then I probably did something wrong as an Owner and not having more meetings prior to that point. Would you say that's fair?

Absolutely. I had gotten them in tears. It's rough.

Let Go Of Someone: If you're the one leaving and moving on to a different game, others will ask what's going on.


“Based on our prior conversations, things just aren't changing.” You should be able to say that. They can be in tears and be emotional about but they shouldn't be like, “What? I don't know where this is coming from.” They shouldn't be in that situation. You should have had previous conversations.

If we are talking about the viewpoint of what shoulda, coulda, 100,000,000% that is the case. You are right.

Unless they did something egregious and you said, “That's not appropriate. You are leaving now.” I have done that before. “Don't bother coming back.” You also bring up another point that there are certain people that you need to be careful with letting go. I had an employee, there’s an age discrimination issue that could come up if they are over the age of 45, 55 or something like that and a lawyer let me know about it. If someone is pregnant or has recently had a child and that has affected their work, then you need to be careful about how you let someone go in that situation, and race is always an issue as well. If any of those things could potentially be an issue, it's always good to talk to a lawyer first, especially one specific to your state.

Any good lawyer will tell you as a general statement to wait. If it's a pregnancy or a medical issue but didn’t come back, then decide. There are always exceptions. Again, it's always going to come down to documentation. If they were flagrantly doing things and now, they are pregnant or might get you for age discrimination or something else, then you’ve got the goods.

You still have to have the objective data to back you up. You have to have documented proof of what has gone on in the past. In those situations, there was one situation where their age was a potential issue. I had to provide them paperwork so that they understood that this wasn't an age-related firing. They had to take that home, review it, sign it and get it back to me.

That was an issue that I had to deal with. A lawyer walks me through it and eventually worked it out but you want to cover your bases and make sure you are doing everything legally prior to those situations. I'm glad that you brought that up. I would refer the owners to a lawyer for sure to make sure they cover their bases when they are letting people go.

You brought up another point that there should be a checklist. We call that our offboarding checklist but when you offboard someone, we needed to get the keys. “Did we have all the passwords? Have we removed them from access to all the software? Do we have everything we need? Did they have any access to bank accounts that they need to,” especially if they are in billing? “Have we done all these things? Have we signed all the paperwork? Have we notified the payroll company and make sure you have that checklist?” You make sure everything gets done appropriately.

One thing I would do on that, and you might have done this yourself is, you have to have the backline steps like remove the password. You are not doing that in the room with the guy. Necessarily, I have done that too. It's an interesting thing where if we were 90% sure it was going to happen and that meeting that they were gone or we had to let them go, then as they walk up the stairs literally, we were cutting off passwords and changing passwords.

It's a partnership; it's a team. It's not just employees. Click To Tweet

We would let the Building Manager know that we are talking. I have done that before. I agree with a checklist. You need that but I will make sure that some things are post-firing. Now they are gone and you don't have to do them, the keys, passwords, bank account data, and whenever they change keys and passwords to get locks and keys.

I have had the checklist in the room with me. I would call it two checklists. I had a master checklist of these processes like getting keys back that I control. No one saw that but me or my manager. That’s what I did, and then it went to the file when they were done. I had another final document in that meeting. It was the last meeting. I had that there. It’s interesting results. It was the list that the person has to acknowledge to the best of their ability. If they were not, they were not being let go for reasons like race, sex, age and so on.

That's, again, to the best of their knowledge because they can assume whatever. Is that a legal point or else? No. Imagine what that creates on the other side is you are going to get a little flack like, “What am I signing here?” “This wraps things up and we went over why you were being dismissed because of stats, objective data and so on. I want you to know that it has nothing to do with such and such.” “I guess not.” They won’t all sign it. Let's say that it has been overt about that. However, the idea of that document is that they have to mutually agree that it’s okay. It's a funky area, I know that but we always had that. It’s always nice to see the person has to confront themselves. It's always weird. I thought it was good to help end it.

What your thoughts then when someone resigns and says, “I'm putting in my 2-weeks, 4-week notice. I want to be done at this date?” There are some situations where you might say, “I will take your resignation and you can leave tomorrow.” I'm sure there are those situations. What are your thoughts in general about letting someone stay on for four weeks? Who do you let stay on? Who do you say take off tomorrow?

It's about trust. In my lifetime in the area, medical and HR, both separately and together, maybe 5 or 10 people on the hind side that I have let stay. Very few people stay. This is someone that either I know from prior work before this job, we have some connection prior to it, a PT from school, a buddy from here, my personal assistant or raw employee. I would say of those 10, 2, 3 or an employee I have no relationship with prior, that's few when I do that. If I would do it with a PT, I would say, “It is a standard for a PT, in my opinion, to give you at least four weeks’ notice.”

That should be policy, I believe. When I sign on their employment agreement that there's going to be at least 30 days’ notice for severing the contract or the agreement.

I don’t think they would need more than two. It goes back to this willing employee thing. If they are a good person, you trust them and you don't feel they are going to bad mouth you, call you names, or pull people with you, there is nothing objective there. There is no statistic of, “When you are leaving,” they are leaving but here's the thing. As an Owner-Manager, you have to know that if you keep them on, you cannot be surprised by what you get. Let me just say that.

Be willing to experience the situation, even if they are a good guy or gal. You have no other PT hired. You didn't create your bench of potential recruits. “I’ve got to keep them on.” I would say get rid of them. The general rule is to let them go and say, “At the end of this week or today, I would like to. Thank you.” That’s it. If you keep them on because you need them, they have to write up their job duties first or something else, or they were in the middle of all these notes like, “I finished their notes or whatever,” then don't be surprised that you might get somebody who is on social media, Facebook or texting your people that, “This didn't work out. See you then.” I have seen that happen, too.

All you can do if you think that might happen in that final interview is be upfront about it and go, “I'm going to agree. I’ve got your resignation letter. Thank you very much. I'm sorry. Can we salvage this if we want to or not?” “No, we can't.” “I’ve got four weeks. Thank you for giving me four weeks.” Acknowledge them for that and then, “I need you to do me a favor, John, Jack or Cindy.”

PTO 158 | Let Go Of Someone
Let Go Of Someone: You'll feel better when you get rid of dead weight, unwilling staff.


If you are going to keep them on, you have decided that. When someone is leaving, they can get a little funky because they are leaving. They don't want to be here for whatever reason or moving away for good intentions but it's not working out. I would say these things. You might not see it if you are the one leaving and moving on to a different game but others will ask, “What's going on? Why are you leaving?” the patients, too.

“You have been backing me up for years in this role in whatever, I would appreciate that you do not engage in any communication with any staff at all about your department. This is between me and you, and the Manager. When we hire a therapist, I want you to train them on to the role and train them up a little bit. I want you to introduce your patients to the new therapist, please, out of courtesy but I'm asking you, please don't share this with anybody else. I won't hear a bland nose.” That's it. If I hear about anyone else finding out about this, we are going to talk.” It's more of a casual, “Help me out.” If you decided they are willing, trusted, good, and will stay, that type of conversation is a must.

Even if they were saying moving to another state or something like that, would you ask them not to bring that up?

I would. When I leave a place and when I have resigned from a job, nobody will know. Maybe a day prior. I will give 6 to 8 weeks, even 3 months. That's a different level and things. The staff doesn't know anything because I'm not acting any different. I'm not going to assume they know anything. It's business. We’ve got things to get done. Maybe a day before, “Tomorrow won't be coming in. It's all good. We are doing this.”

I would say, “Go two directions with it.” I would say yes even if they are moving away. This establishes the area, no matter how they say it. They are an established person or a pillar that was there for block time. They are known for that job and those procedures. That smile in the morning, handshake and now they are gone. They are going, “You are going. Why are we losing staff?”

I would ask the person to zip it as long as they can. If their wife works there, their best friend or husband, it might leak, I get that but I would have a conversation every week with the person like, “Are we still good.” Meanwhile, recruitment and move your butt on that side but as a general rule, I keep very few people when they resign more than a week max.

People usually keep those people on because they haven't found the next person or out of fear that they might lose some productivity. If that person is not culturally aligned, not establishing values, and they are not productive in the first place, just let them go and deal with the pain of it for a little bit until you find someone amazing.

In Arizona, I had someone who he was just dealing with for a while and productivity was mad, and then he complained about things every so often. Some patients loved him but his number overall wasn’t the best. When that person was finally held accountable, he didn't like it and put in his resignation, which was a good thing but the client was scared. He has two new physical therapists on board that are amazing and he's like, “I don't know why I dealt with that person for as long as I did. We are going to move in a great direction now that I've got these other great therapists.”

There are better people out there. There are A-players, you can find and it takes some time. Don't be afraid to let them go. When the resignation does come across your desk, be okay with it. I don't want to say there’s plenty of fish in the sea because everyone is looking for a physical therapist now. There are better players out there and people that will work out much better for your clinic, and you will be a happier owner if you've got people who are truly aligned with you.

Part ways as clean and simple as possible. Click To Tweet

You are building a team. Again, it's a partnership and a team, not just employees. That is the illegal word for them or staff. At the same time, if the viewpoint is a bit more along the lines of they are partner, not my friend but they are my partner in crime, we are building this together and we are a team, that takes some of that separation out of the game of like, “Boss and Jr.”

I dealt with somebody and they had to let somebody go. She was an amazing therapist. She had a unique skillset but as you said, she did not align with the purposes, the goals of the group and was snarky. Some patients loved her and some didn't. She had to look at that and go, “Play loser. What happens?” The answer was you’ve got to go treat a little more than you want to. You get some PRN person for a few for as long as you like. In that case, they were gone a little more sanity above the clouds. You will be surprised when you get rid of some of that truly dead weight unwilling staff and you go, “Why do I feel better?”

It's very common that when you let some of those dead weight go, numbers tend to go up all of a sudden, productivity improves and you are like, “I have never seen numbers like this before. Nothing is different. My marketing hasn't increased but all of a sudden, numbers get better.” It happens so often. We covered a ton of stuff and you shared a ton of time with me. I appreciate that. One thing that we didn't cover and I alluded to it earlier, is the importance of an exit interview. Can you talk to me a little bit about the importance of an exit interview? What that should entail? What does a leader trying to get out of that exit interview?

I have some documents in place, checklists, and so on, as I mentioned. Let's say you exit. They are definitely going to go now if that's the viewpoint you want to get.

It's more than likely amicable. “We have agreed that this is your last day,” or maybe letting them go, you have prepped them enough and held them accountable enough where you say, “This is your last day.” They say, “I understand.” You could maybe go into, “Can I ask you a few questions if you don't mind?” Is that one way to lead into it or how do you lead into that?

It would depend a little bit on when we last spoke about any infractions or problems. Has it been a year since then? It's a bit of a surprise, as you said. Has it been three months back? “I looked at you, you are yesterday funny because you did something.” There's a little dependency on timeframe here. Mindset is care. Why do you want to get out of it? You want the person to understand that it would just be not a match for whatever reason. If they are moving away, that was a non-match, either way, we don't match. We are doing PT and in purposes, you are not living here, you don't agree with this and whatever.

If there's no agreement on basic purposes and values, then that's it. I would communicate it like that. How would you open the conversation if it's a request to leave? “I heard you are resigning. I’ve got your letter. Thank you.” Acknowledge them. If it's more of, “You've got to go now,” then say, “I want to talk to you about a few things.” If you are asked, if they are aware, and they will go, “Am I being fired? Am I being let go?” “I want to talk to you about something.” I would not answer that question. Let me say this as an asterisk.

If it's someone that it's going to be a bit of a fight and a bit of a verbal, you don't know how it's going to go but you need to go and they say that I have done this, “Am I being let go?” “Should you be? Should I let you go?” What does that do? It throws it back. “Maybe yes. What did I do?” If it's a salty individual, I have given them like, “You tell me what's going on, Jack? What have you been doing?” They will pause a little bit. You didn’t say anything you shouldn't say. “Tell me what's happening?” Let them originate, “I took that pen. I'm sorry for that,” or whatever.

Ideally, you want them to acknowledge and agree with what you say. You want to be able to say, “I want to talk to you about something. Since this, why it happened, stats, we have had talks that it’s not working out within reason? What do you say about that?” “You are right. Stats are down but it's Rebecca's fault.” “You are the manager of the area, you are the lead therapist or that's your patient. I'm sorry about this but we have to part ways here.” You would like them to understand.

PTO 158 | Let Go Of Someone
Let Go Of Someone: If there's no agreement on primary purposes and values, then that's the end.


It’s always the great first approach like, “It’s not working out. We don't match up here. Sorry.” 9 out of 10 times, 8 out of 10 times more than that has to happen because that's just not enough. They are assaulting individuals or you didn’t care for them more. It can go both ways. These things occurred. “I have reports, emails, stats, checklist, and all that is my ready to go, so what are you telling me?” “Today is your last day. We are going to pay you for the rest of the day today and I will give you money or not.” That's it. Have it role played, have your head straight how it could go. Run it how it could go, not how it's going to go because you have no idea.

In HR, the rule is you have no idea what’s that distinction. If they are having a bad day, you are getting that bad day. I would drill it two ways, completely the worst firing ever and that was easy because you will say one of those things afterward. That was horrible. That was nothing. I would always role play it both ways and communicate it's just not a match. “We are not matching up on some things. The statistics I gave you are not matching. A lot of that not matchy, and then we are going to part ways here.” That can be as clean and simple as it is but you can get heavier handed, a little more, “Will you tell me what's going on if you need to?” You have to be ready for that and skilled a little bit.

If a parting of ways goes relatively well, it's professional, there's an agreed-upon date, you trusted that person for some time, then moving on to something else, and you understand whatever, I like to have conversations with them not just, “It's your last day and you are packing up your things. You’re here. Cut the cake. See you.” I would like to have what we call an exit survey or exit interview to say, “What went well in our relationship here at the clinic? What recommendations would you have for us to change to do better? What are parts of the company do you think we can improve on? How did you feel about your training? Do you think you have trained appropriately?”

I don't want it to be a bitch session or a lot of griping but you are looking for ways you can constructively grow from the relationship and their parting of ways. Not every firing or resignation is set up to allow you to do that but if you are not looking for that opportunity, you are losing out on that opportunity to get proper feedback and criticism. Some of it could be emotionally charged and you might just forget about that stuff but you could come away with some nuggets for improvement.

I love that idea and I didn't answer that point for you. What I have done differently but that aligned with that exact thing is, when a policy I implement when I'm in a company is that employee reviews or evaluations happen every year or six months number one, as a standard by that manager, and as needed in other words but it's the same basic format.

At the front end on their three-month probation and employees will do both ways, it will be, “I didn't like it. Training has not been good. I'm worried about my job or whatever.” There's your version and their version. On the standard normal evals or reviews, there's more of a generic format we talked about a little bit.

On the exit end, I use the same document. Also, if you have 3 or 4 of those in the file, it's not a mystery. You already heard that it has been going bad, I'm not happy and they have heard that. I love the idea of having an evaluation at the end, of course, but it's going to be skewed for sure. Maybe not every time. Let's say most of the time, it will be skewed. I have no problem with that idea, I love it, especially if you have no system prior. Ideally, it's happening so often that you didn't miss it.

I love your point there that even if you did have the survey at the end, nothing they bring up should be a surprise because you have given them the opportunity to express their concerns all along the way and you have them properly documented, noted and you have made changes to correct those issues along the way. I love your point in that regard. Anything else you want to share about how to successfully let go of somebody? We covered a ton of stuff.

I started up with and I said a couple of times here that these are your team members and prepare for both sides of it, the ugly and the good. Consult an attorney where it might get sticky. You should certainly do that to seek for documents to sign and certain legal points like that. As you said a couple of times, Nathan, as an Owner yourself, our practices and you are not just a PT or a doctor, you are a business owner, it doesn't have to be something like Jekyll and Hyde here. It's not like, “I have to run a business and be a mean guy but I'm your friend.”

When you discipline your team, it's just a matter of changing your tone a little bit. Click To Tweet

You can be the same person.

If you operate standardly and professionally as an Owner with respect for your team, care for your team, and are never too friendly, then when you have to let them go or even discipline them, it's a matter of changing your tone little bit. You don't have to get heated or crazy and go, “What happened yesterday?” “I'm sorry.” That's the reaction you want. If you are a standardly professional, respectful person that cares for their team and they see that, have the systems in place, it will be a lot easier on the back end because it's like, “Sorry, it's not working out. We had a good run.” It's a little bit more like that and a little bit less like, “Sorry.”

I love a lot of the conversations that we have had so we can make that conversation and make that process less emotionally charged. The more you can look at it, you can scrutinize the person and their performance based on what's in the best interest of the business, then it's easy to come up with statistics, incidents, you name it in which they have valued malalignment that you can appropriately let them go without it being emotionally charged. If you can hold them accountable throughout their time with you appropriately, then a firing can be a very easy and simple process.

A lot of times, it's not because we are not the best in the documentation and that kind of thing but the invitation is to start documenting and hold one-on-one meetings where it's appropriate and accountable. If you see someone going the wrong way, love them enough to say, “You are going the wrong way and it needs to get corrected.” Also, recognize that you are not necessarily the best place to work, there might be a better fit for them somewhere else, and you need to help them find that better place.

I can't tell you how many people I have let go. They didn't come back and say, “That was the best thing you did for me. After you let me go, I decide I want to go back to nursing school. I want to do these other things. If that hadn't happened, I wouldn't have changed direction in my life.” Recognize that you are not the end-all-be-all. You are not the final resting place for all employees. You are more than likely 90%-plus of the time a stepping stone to their next place and help them along the path. If people wanted to ask you about HR-related issues, you doing some consulting, how do they get in touch with you?

I have a website if you want to check that out. There are some little tips and media there. My phone number is fine. It is (917) 312-4294. I don't mind a quick text or call, and then

Thanks again for your time, James. I appreciate it.

Anytime and we will do it again whenever you need me.

Thank you.

Important Links:

About James Savas

PTO 158 | Let Go Of SomeoneI love working with ambitious, driven individuals who have dreams of going big(ger) and just need the right support, backup and capacity to see it accomplished. I help them get that done.

The majority of my professional career has been in the Medical sector with the majority of that time in the Human Capital Management/Recruiting and Business Coaching/Development spaces. Over 20 years I've strategically planned and executed programs and projects for my partner-businesses' expansion from as few as 4 offices to up to 16 offices across 3 states. In my time working directly with various Owners and their staff throughout the boroughs of NYC and down the Rocky Mountains, I've hired well over 500 effective and productive Owners, Executives, Managers and Professionals, as well as created the training regimens for those people and their staff.

In addition to my savviness and acumen as a business expansion professional, I'm a successful soccer director and coach and a very very proud father of 3 amazing beings.

My Mantra is - Keep the create in life and be surprised by nothing!

Additional Points of Interest (some outside PT and some for fun):
* Published article in Impact PPSAPTA magazine (2008) "Hiring & Retention"
* Nationally Licensed Soccer Coach
* Director of Development of several Soccer clubs/groups
* Certified Assistant Teacher
* Co-owner (former) of a small family-owned retail dessert business
* International traveller (school in Italy & worked short-term in Ireland)
* Avid survivalist/camper/outdoorsman
* Humanitarian (as I'm able), directly assisted during 9-11 @ ground zero NYC
* Interned w/ MSNBC out of college (Broadcasting Major)
* Was a celeb-host at the 1996 Grammy's and 1997 ESPN Awards (some good stories not for air)
* Was on HGTV (with my family) in episode of a Montana HouseHunters
* Music composer/Short Story writer (Sci-Fi)
* Best hat I wear - DAD; pays shitty but great rewards!

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PTO 157 | Business Expansion

Most PT clinic owners have aspirations for growth - either in size or number of facilities. However, knowing WHEN to do a business expansion is the most important question to consider. Eric Miller of Econologics generated a checklist for clinic owners to use during expansions. He joins Nathan Shields to discuss how it can help them minimize risks and set up for success. If they have hit key statistics benchmarks, put finances in good order, made policy and procedures up to date, anyone will be well on their way to sustainable growth.


Listen to the podcast here

So, You Want To Expand? The Practice Expansion Checklist With Eric Miller Of Econologics

I've got Eric Miller from Econologics, on with us again. For those people who are like, “Nathan's got Eric on here all the time. There's got to be some financial compensation Nathan's getting.” I can assure you there's not. I bring on Eric, number one because many times it's not easy to get show’s guests and Eric is available but more than that, I think the stuff we talked about has been pretty good. I love the resource that you provide.

It's geared towards practice owners. You can find 1,000 financial gurus out there to get advice from but most of them don't understand how a private practice works.

I consider our meetings, our blog episodes to be rather valuable for any size practice owners but I appreciate you coming on. Hopefully, it's not a little overdone for people. I think we still get a ton of good content out there.

We'll keep it fresh.

PTO 157 | Business Expansion
Business Expansion: Always assume that whatever expansion you're going to do will cost 20% more and 20% longer than what you think it would take.

This is going to be not necessarily part 1 of 2 but before the last blog episode that we recorded, we talked about a couple of future blog topics that we could talk about because we've covered a lot of stuff. One was about practice expansion and what owners should consider when they are looking forward to expanding and growing. That's what we're going to talk about is practice expansion but then there's also another part to it that can happen as you expand and that is bringing on partners. That's something that we will talk about in a separate blog episode. You can look forward to that one as well. Now, we're going to keep it simply down to expansion like when to consider getting a bigger space, bringing on a new PT or getting a second location.

Those questions come up especially if those are within the owner's vision. In the future, there are things they need to consider and things they need to plan for ahead of time. Eric has a great Practice Expansion Checklist that we're going to look over and break that down a little bit. Before we get into it, is there anything you want to say about it and maybe what brought you to creating this checklist?

I think everybody has the idea that when you get ownership, obviously, at some point, you need to expand and you want to expand. What ended up happening is that I started seeing practice owners that were trying to expand and then they would fall on their face. There were a number of reasons for that but they were trying to expand to solve a problem. Expansion is a great thing. I want everyone to expand. I want everyone to have clinics and employees, I think everybody wants that but you have to make sure you're doing it in the correct condition. There are indicators that you need to make sure that you're looking at prior to making the decision that you're actually going to expand.

That's where it came from. Like anything else, it usually comes from the school of hard knocks and things that we see that people diagnose the problem wrong or they're trying to solve a problem. Usually, it comes down to people try to expand it because they're trying to solve an income problem. “I don't have enough money coming in from my current practices. If I started this other practice over here then that would solve all my problems.” What ends up happening is all the reasons why your current facility isn't profitable, isn't solvent and isn’t running where it should? All those problems of why it's not in the condition that should be spill over into the new one. Now, you've got twice the problems. That's where it came from.

What I love about the checklist is many people might feel it's a good time to expand, “Things are going well, my bank account's looking good.” They're looking at some data that might not be a good indicator that it's time to expand or they're like, “This is going well over here. Let's do the same thing over there,” to fulfill a vision that they have or a goal that they have without making sure they've checked all the boxes before doing that. That's what I love about this checklist.

It's not like this is going to omit any problems, resistance or pushback that you're going to get when you expand because that's just got to happen. There are going to be things that are going to crop up whenever you decide to expand. That's the way that the universe seems to work. I want to make sure is that there's a better chance of your success and if these things are in place, you have a much higher degree of probability that you're going to succeed.

The first indicator, which I think is as we talked about your current facility should be at or nearing its capacity level. What does that mean? It means that your schedules are as full or pretty close to full as they could be. The space that you're utilizing is seeing the maximum number of patients possible. Cognitively it makes sense like, “Before I decided to expand, I want to make sure that my current facility is filled up to the brim.” That makes perfect sense to me but I've seen it not occur. That would be my first thing and you don't have to have people waiting outside but you should be pretty close to what your current capacity is before I would start deciding to expand.

There are two things about that. One is I've had some owners who have two clinics and they want to open up a third but one clinic is going strong. The second clinic is doing okay and they're thinking, “I want to take advantage of this opportunity over here.” This third space, maybe physicians approach them or there's a location that they know is geographically nice for the outlay of their company. I have to remind them, “You're one clinic is doing well. It's the lead horse, it's bringing in all the cash. Opening up the third clinic means that you're going to have a hard time making that second clinic get strong.” It's going to divert your attention. You're going to be distracted and that second clinic is going to either continue doing what it's doing or get worse because it's not getting the attention it needs. Let's focus first on bringing up that second clinic to speed and then look at the third clinic.

We know we're human beings and we get impatient. Business owners get impatient. That’s why I see where it happens but to your point, you have to have some level of patience and saying, “Before I start this other practice that these facilities that I do have a need to be at or near their capacity levels.” That would intuitively make sense.

There are two ways to measure that. You shared and I liked that you made sure that both the therapist's schedules and the space are at capacity. Those are two different things. Therapist's schedule, you can look at the number of available appointments the therapist has in a given week. A general rule of thumb, when you're talking about it's running near capacity, I would say 85%, 90% of all of those available appointments should be filled up on a regular basis, not just one week here and there but weeks at a time going on.

That should be a trend, for sure.

You've got to look at the therapist’s available schedule and a rule of thumb that Shaun Kirk laid out for us almost a decade ago was if it's a 3000-square foot space, the max capacity general rule of thumb is 300 visits per week. If you take 10% of the square footage, the general rule of thumb would be 300 visits for that size facility would be maxed capacity. I know it's different across many states. You then want to take 85 to 90% of that on a routine basis turning outpatients.

You are using the space to its fullest capacity. I ran into another PT who is starting to do massage therapy, bringing that service in because he's got space to do it. He's trying to use this space to full capacity. That's what I'm talking about. Looking at your facility and saying, “How can I squeeze the most out of this orange and how to do that?” You would be able to provide a lot of insight into that.

Running at capacity, I think that's a given but some people don't know what those indicators are as to what their capacity is. I'm glad we covered that.

The more people you bring into your group, the more chances of having toxic individuals to deal with. Click To Tweet

The second one says business reserves, minimum maintained. What does that mean? If you're near capacity, that would be an indicator to me that the money is coming into the organization and it is enough so that you have reserves in the organization. I want to make sure people have at least two months of business expenses reserved in their business savings account to be able to handle any emergency.

When you're talking business expenses, does that include payroll?

Those are the expenses so definitely it’s going to include payroll. If your monthly expenses are $100,000 then I'd want you to have at least $200,000 sitting in the business savings account. It's totally fine. I think most people were quite frankly woefully underprepared for what happened and that hopefully knocked some sense into people like, “I can't be imprudent. I got to make sure production is at a high level so that I have the ability to have reserves.” I know Medicare's always squeezing reimbursements. I know all this stuff is happening but that doesn't mean that you still can't get a 20% profit margin. That would be an indicator is that if I have reserves, I am profitable.

Would you include your available line of credit as part of that reserve?

It'd be nice to have additional to that but I would probably still try to keep it as liquid as I possibly have.

These reserves, the way you're saying it, shouldn't be used to then fund the next location whether that's a down payment deposit or a capital to be used.

Potentially, it could. You could have an expansion and development account where you put money into for something like that but let's solve one problem here. If you have significant amounts of reserves then yeah. As you expand, there's going to be a significant expense to expansion. You may need to put a down payment. It’s likely you're going to have to do extra marketing or bring on employees and there's going to be a lag between when they produce and when you get the money in. You need to rely either on credit lines or reserves to be able to do that. It'd be awesome to have both.

That's why I look at that indicator. You want to have some reserves there so that you can rely upon that. There is that lag period of when the production actually starts to occur and you get the money in that you're not totally stressed out like, “I got like $20,000 in my business checking account. I'm just barely making payroll.” You don't want to have that problem. There's already enough stress in an expansion that you don't want to constantly have concerns about that.

I think some therapists would be surprised at how much it costs to do construction in a space. You're talking to $200 a square foot. If you're doing a significant amount of TI. If it's a shell, you're going to have to have bathrooms and walls and plumbing and architect designs. It costs more than you expect typically and you've got to be well-prepared for that.

PTO 157 | Business Expansion
Business Expansion: It'd be an excellent asset for households as an income source to keep commercial buildings. They are extremely valuable for practices, and private equity groups are starting to see that.


Always assume that whatever expansion you're going to do is going to cost 20% more. It takes 20% longer than what you think is going to.

I thought you were going to say 50% and I still would have nodded my head.

I probably could but I think having business reserves is an indicator that you are profitable and that you have good control of money. If you don't and you're still towing the line of spending everything that you make and there are no reserves there then I would have a tough time recommending to somebody that they expand because you're going to have all the same problems. I've seen practices that do $10 million in revenue and still spend everything that they make. That's a matter of putting good control into the finances.

That would be a nice problem to have. What is the next one?

Business debt is minimal. If you got credit card debt, that's a bad indicator in the business. I'm not talking about using your credit cards to pay your expenses because that's a good idea, as long as they're paid off every single month. That's why I say it's minimal. Meaning that you don't have a ton of debt service already in place. Your equipment's paid off. If you have business loans that your credit lines are open. They're not all encumbered by debt. You want to have some factor of safety here as you expand because of the lag. The only debt that I would like you to have before you expand is the commercial if you own the building. You don't have to have that paid off. Everything else, we want to have it as minimal as possible.

Where would you put student loan debt in there?

That's more personal debt, I think. What I'm talking about here is the business debt. I would say student loan debt is going to be more on the personal side. I would like to have that paid off too but it all depends on when and how much.

It would be a healthy practice to have that completely done. You don't want the stress of that on top of this.

The amounts are just staggeringly high anymore and it's crazy. When I got out of college, it was like $15,000 or $20,000 in debt. Now, it's 8 to 10 times that amount.

I think it's routine what we're seeing in surveys for PT students to come out with $150,000.

I guess my advice to those people is you're going to have to continue to live like a college student for at least another five years and that's okay. Continue to do it. It will pay you back in spades by doing that. I've had too many stories of practice owners that the first thing they did when they got out of school was they bought the cars and the houses. I look at their condition several years later and it's not great as opposed to the ones that just said, “I'm going to attack and get it done.” They were in a much better financial position in that same timeframe. The effects of debt are stressful. The minimal amount of debt that you can possibly have, the better.

Would you encourage taking on commercial real estate? Is that something that you promote?

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I love for practice owners to own their buildings. I think you get a great tax deduction with that. When you decide to sell the business to somebody else, if it's a nice building, it's a nice facility and it's a staple of the community and who would want to move? Moving's a pain in the butt. It'd be an excellent asset for the households as an income source to keep the building. These buildings for practices are extremely valuable and private equity groups are starting to see that. I'm starting to see them buy buildings because they see the value that the leases that corporate entities are offering practice owners in their buildings are good.

I'm not exaggerating when I'm saying some of the real estate is more valuable than the clinics themselves.

They can be. It's a great asset. If you have the opportunity to get it 100%, get it. Whether to pay it off or not, that's situational but it certainly is a great asset for the household. I would go out of my way to acquire that.

These last couple of items on the checklist have been more financially related. I like the next few checkboxes to see outside of the financial stuff. Now what?

You're going to expand. You're going to need people. If you don't have a good recruiting system for staff and a good training system then all the problems that you have with hiring and staff right now, you're still going to have the same problem. I would certainly make sure that you have a good system for recruiting people, for onboarding them, for training them so that you have job descriptions, statistics, measurements and all the things that make you a good executive. As you hire people, you can hire people quickly. You can get them on posts. You can get them producing. That lag is reduced. I keep talking about that lag but that timeframe, you want to reduce time as much as you possibly can. Certainly, having a good hiring and training system so you don't bring on deadbeats.

It's important that you have some experience in finding what personalities that you're looking for. How do you filter out those people who are value-aligned during the interview process? Do you have a well-developed hiring process that is not sending a resume and have one interview and then send out the job offer? There should be multiple steps to that process to filter out people that will work in your clinic at this point.

Hopefully, as you're expanding from a single facility to a second facility or going from a smaller facility unit to a much larger facility, you have a hiring process that will make it easier to find the right people that fit in your company. On top of that like you're talking about, it's imperative that we have things written down such as job descriptions. How are we going to measure performance? How do we get these people to produce? This is how we train them to hit high productive numbers.

The last thing you need is for you to open up a second clinic and have a bunch of people doing their own things. If you think there's a lot of stress of owning a single clinic, add a second clinic that doesn't have any policy and procedures and you're going to be going nuts. Your head's going to spin like, “Why are these people doing what we did over at the first clinic?” That's because they have their own idea of how to do things.

This is where I think your lack of billing and executive team will be exposed too if you do that because of who's going to oversee. Let's face it. People are awesome but if you bring more people on, your chances are, you're going to bring in some people that may be toxic. You have to be able to withstand that and have a system to get them rooted out and evaluate them. That's where you'll find that your executive team is exposed if you don't have one as you expand. It's okay, we're going to learn things as you expand and that would be one of them.

You don't want to be generating systems after the fact. This is a crap show over here. I need to actually get some organization in place. You don't want to be in that position.

We didn't say it was going to be painless. We're trying to make it so that it is less painless.

That rolls into the next item.

Every organization needs to have, like we said, an organizational chart and who's doing what? What's my chain of command or the operational and policy and procedure manual? You can't be operating on outdated stuff that nothing's written down. The better that you have this grooved in, the easier it is to expand because you have a policy and procedure for everybody to follow. That organizational chart is being mapped out and you have these systems in place. It makes expansion easier.

PTO 157 | Business Expansion
Business Expansion: If you don't have a good recruiting and training system, all your problems with hiring staff will not be gone.


It's important to recognize the value of that organizational chart because not only are you delineating where responsibilities lay within the organization but hopefully if people also understand that these represent communication lines as well. That gets missed when we were looking at organizational charts and I've referred people to traction. Gino Wickman's Traction lays out a number of different ways. You can organize a company. I'm sure there are more out there but Traction seems to be a popular book that's been read by small business owners and so they might have it on hand and they can look at it.

The last thing you want to do is and what I noticed is, me as the owner and we would tend to hire the physical therapists. At the smaller stages, we were hiring the therapists but we had some executives who would hire front desk teams, billers, that stuff. If we didn't properly hand off their oversight to the clinic director, they felt like they needed to come to us with HR-related issues because we were the owners so they're going to come to us directly and that handoff was imperative. Showing them the organizational chart, “You're down here as a therapist. The person right above you is the clinic director. When you have questions, now I have to hand you off to them. You talk to them. Otherwise, we were getting inundated with a lot of questions and concerns that should have been going to the clinic director and they bypass them.

I'm fascinated because wouldn't think, “I'm just answering a lot of questions here,” until you looked at the organizational chart, you're like, “Why am I answering all these questions? This is what this person's supposed to do.” It is amazing that once you have that organizational chart, it does allow you to say, “I'm going to direct the flow of traffic to this person.” You can show someone without making them think that you don't care or you're being disrespectful. It's like, “This is the person that is in charge of this, that be handling this.”

It's very common for owners especially if they're physically present going through different clinics that they might have. If they're passing by the front desk, the front desk person, “I got a question for you.” You're someone of authority. If you no longer want to be the answer man or woman, if you feel like everyone's coming to you all the time and you've got a handle on all the issues, it's probably because you haven't put someone in place to oversee them. They don't understand that the front desk person shouldn't come to me. They need to go up to either a front office supervisor, office manager, if you have it, administrative assistant, if you have that between you and the team or the clinical director there. You need to be directing them along those communication lines of the organizational chart.

I think that makes expansion possible in the first place and much easier. That's a big one. That's where I think having a good consultant can help you with those two right there, the hiring and the organization. That's why you would want a good consultant that can help you be efficient and be able to have a hiring and training system. I think that's imperative.

The last one there about legal compliance. It's something that I don't know if it's how we are but just forget that maybe we should lean on attorneys and make sure the legal stuff is set up first well.

Not only that but especially in a reimbursement game, which is what physical therapists are in. You got to make sure that you're keeping documents and you're billing correctly. I call those compliance issues as well because how easy is it for one of the reimbursers to come in and do an audit and find that you owe us $200,000 or you owe us $100,000? I've heard horror stories about that. That's one area, obviously. You don't want to try to build on chaos and your compliance lines. It includes making sure your contracts are in good order and that everyone's abiding by the rules of those particular contracts. It means internally and compliance because as you expand, you are going to get attacked. It's going to happen in some way, shape or form.

Either you're going to have an employee that tries to attack you, maybe a patient, maybe a slip and fall, maybe a competitor or whatever it is. If you're not getting attack, you're not expanding enough. It's going to happen. I tend to see where people get caught so to speak is because of the compliance lines. Either they didn't have good HR in place. Maybe they were doing a billing incorrectly and one of the rogue employees, “I got them now. I'm going to expose them for this.” That's what I'm talking about. You got to make sure that you're spending some time on defense, as well as trying to get new patients and trying to grow and expand.

You got to spend some time on defense and that also means making sure that from a corporate standpoint, your records are in good shape. You keep good minutes once a year and you update. You're paying your licensing fees and all this stuff that no one likes to do. It is the backbone of the business because it takes one regulatory board or authority to come into your business and find you not doing something right and they can shut you down.

If you're not getting attacked, you're not expanding your business enough. Click To Tweet

Those weak spots get magnified as you grow if you don't have them in place. It's easy for an owner in their one facility with a few employees to make sure everything's running well. When you no longer have visual oversight, when you're talking about a 2nd or 3rd location and you're not physically present, a lot of stuff could go awry. If those things aren't short up, they will be exposed as weaknesses and the compliance board isn't going to care. They're just going to say, “You didn't do it so you owe us money.”

They definitely won't care. Let’s say, “We're going to withhold your pay because of that.” It's unnecessary but it is a key to expansion as well, is that you have to make sure that the defense of the organization is in good shape and that you are proactive in making sure that all the regulatory and compliance lines are or stringent. There's policy and procedure written on that. I think that's important.

You don't have to know all of the compliance measures by heart. There are third parties that will help you figure that out. You can find an attorney that can tell you how to maintain your LLC minutes annually. Honestly, Will and I, about several years into the business, somebody said, “Do you do your annual meeting minutes?”We look, “I don't know what you're talking about.” If you don't know, if you have an LLC, you should have annual meetings and annual minutes that can be shown at any given time.

Not just attorneys, there are companies out there, even those specific to physical therapy but healthcare professionals in general, that will teach you what you need to have on-site for compliance stuff. There are people who will review your documentation to make sure it's Medicare-compliant within billing and documentation. There will be people who will teach you what OSHA compliance looks like, what HIPAA compliance looks like. It's worth it to spend the money on those third parties so you don't have to find it all yourself.

It's probably a good idea to have someone like that come in and do a mock audit on you. Pay whatever the amount is to do it. I would do that before I expanded. I would make sure that way, I know everything is clean as we go into expansion. It gives you that confidence of like, “Okay” All these things are methods and indicators so that it makes expansion more possible. It makes the chances of success much higher because I got to think that if you're running at capacity, you got plenty of business reserves. You have very little debt. You have a good hiring and training system, you got your organizational chart mapped out and all your legal lines are in good shape. Other than an act of God, your chances of success are going to be that much higher.

One thing that I've noticed especially as I'm talking to physical therapy owners that have successfully expanded in the past, is when they're looking at a second location specifically, it's much easier when you expand from within. Meaning someone who has worked with you and for you for a long period of time shows the desire to expand with you, has shown an ability to produce significant and their purpose and value-aligned with you. The expansion comes much easier in that case. That could be a good segue into our next conversation about partnership and what that looks like. That kind of expansion goes much more smoothly than hiring an outside physical therapist to start a location and you haven’t vetted them.

You promote from within. You give people a chance to see that they're improving and they have a brighter future then the likelihood they're going to stay with you is much better.

Is there anything else that you can think of outside of this checklist that you’ve come across?

I'm trying to think if there are any other ancillary things that I've seen. I think you have to be prepared the pushback, the criticism and the resistance, that's all. I've met few people that we're able to expand without huge barriers and obstacles and you have to be able to have the ability to push through those things.

One of the things I was thinking of is once if a facility has vetted a successful marketing plan, that makes this much easier as well especially if they're going to another location.

I probably should add. That's a good point.

PTO 157 | Business Expansion
Business Expansion: It just takes one regulatory board or authority to come into your business and shut you down if they find you not doing something right.


It could be any formula it could be. We send out these newsletters monthly. We make these visits to doctors. We send these postcards to the general community, right around the facility in a 5-mile, 10-mile radius or whatever. We have a good relationship with the local CrossFit gyms. We know how to do our Facebook ads and they've been successful for a consistent amount of time, over a period of months and years. Now we know we can plug and play that marketing plan into this other location and we will get new patients.

That nail trigger would kill me for not having that on here. That's 100% right. As a matter of fact, I'm going to add that. You have to have a robust marketing online presence plan because you have a new facility. You got to fill it up with people. You need new patients. I can't believe I omitted that. I'll put a little trademark right there and Nathan Shields on that. That is 100% correct, is that you have marketing and probably one of the most important things is the ability to have new patients coming in the door.

You got to get that dialed in. It's got to be detailed, written down and planned. This is what we do. This is what is successful and if it falls out, we know we're not going to be as busy as we were before. Having the ability to plug and play something like that would be a huge indicator of success in a second location. As always, Eric, thanks for your time. I appreciate that. If people want to get in touch with you, how do they do that?

Simple, you can go to and we have a number of assessments that you can take that will give you an idea of how your household finances look. Also, we have the ability to show you how ready you are to transition and the value of your practice potentially. We have downloads and all things that you can use that we built specifically for you as a practice owner and how that relates to your household. I can't stress that enough. Most financial advisors don't address the biggest investment that most practice owners have, which is their practice and showing them how to better utilize that, to achieve personal financial success. That's all we focus on.

As always, thank you for your time.

You are welcome.

Have a good day.

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About Eric Miller

PTO 157 | Business ExpansionEric Miller has been in the financial planning industry for over 20 years. He’s a co-owner of Econologics Financial Advisors – awarded an Inc. 5000 honoree for 2019. As the Chief Financial Advisor for the firm, Eric has had the good fortune to have over 10,000 financial conversations with private practice owners in various healthcare industry and helped guide them into a more optimum financial condition using a proven system.


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PTO 156 | Leadership Development

Leadership development is not a topic commonly discussed within the PT industry. However, just like any business, leadership plays a big role in growing and expanding your business and practice. Dr. Michelle Bambenek is the Regional Vice President of Operations at Empower Physical Therapy Group. She is also a leadership coach and consultant for both PT owners and people outside the PT industry. In this episode, she joins Nathan Shields to break down the critical components of leadership that empower team members to grow and, in turn, your business. Michelle emphasizes the importance of values and imbuing a sense of mutual responsibility within the team. Learn more about the steps and successful patterns to expand your PT practice.


Listen to the podcast here

The 5 Critical Components Of Leadership Development And Business Expansion With Michelle Bambenek, PT, DPT

I have got a special guest, Michelle Bambenek, who I have known for years and worked with Will and I at Empower and Rise Rehabilitation Specialists back in the day. Thank you, Michelle, for joining us. I appreciate it.

It is a pleasure to be here. I’m happy to be on the show with you.

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Thanks for coming on. At this time, Michelle is a Leadership Coach and Consultant for both PT owners and people outside of the PT industry. She did great work for us working with our leaders of the team that we had at Rise at that time. We want to talk a little bit about leadership development. It is something that I haven't touched on a lot on the show and it is something that she is specializing in and invaluable for those therapists and owners who want to grow their practices. Before we get into potatoes of everything, share with us a little bit about you and what got you to where you are at this point.

I appreciate being on with you. I'm excited to talk about this topic. By way of introduction, I am a PT, graduated in 2007. I immediately went into an outpatient orthopedic setting and pretty quickly after that, I was thrown into a clinical directorship position. In 2011, I had the opportunity to transition to working with, at that point, Affinity Physical Therapy, where I met Will. I was the Clinical Director at Affinity Physical Therapy at Coolidge and progressed from there and building as things started to take off or leaving some of the pressure off of Will. He was still treating in Florence so I took on the directorship of Ford's Clinic and then we had the Anthem Clinic. We were fortunate enough to go through the merger with Pinnacle Clinics.

I functioned as a Vice President of Operations for the four clinics at that time, I think. Maricopa, Coolidge, Florence and Ocotillo, the Chandler Clinic. I went in through there. Along the way, I was able to learn a lot from yourself as well as Will and a lot of the expert coaching that we were able to be a part of. I found that I had this natural desire to build, lead teams and offload the owners of the company and help in that capacity. I found that to be invaluable to the overall growth of the company as a whole. I quickly realized the importance of developing leaders, not only of myself but those around me to take that to the next level.

Since that time, you have been strictly in leadership capacities, right?

Soon after I took on the Vice President of Operations and running the four clinics, due to the sprawl of them, it did take a lot of time to be able to work in each one of those clinics, get to know the team and find out what's needed and wanted around what their specific needs were. I was mostly in a capacity of leadership development and training, running meetings and doing accountability sessions and things like that versus the hands-on treating.

It is important to note that for any of you owners looking for opportunities, expansion in the future, or if you are at two clinics looking for a 3rd or 4th at some time along the line, you have to find someone who can manage. Would you consider it middle management, would you say?

Middle management to upper management, depending on the number of clinics. I would say I was in the upper level. It is a necessity for that growth to happen. I would consider the clinical directors that I would have underneath me as the middle management. I was overseeing those and helping in that capacity of a step above them. You always wanted to say, “Everybody is important in that team.” One can’t function without the other. Every single person is an essential team member to make the whole thing move. In terms of an org board or communication line, command line, that is how it functioned for us. I found it very valuable.

Owners can't expect to oversee multiple clinic directors, multiple front offices, the billing, and the marketing. At some point, you have got to offload the oversight of those positions. That is where the value of an upper-level executive like yourself would come into place to take on those responsibilities, a foreign owner, for sure. When you are getting to a third clinic, that position is necessary.

I would have to agree unless you want to burn the candle at both ends because I can see it. It has been done, but it does not last for too long and things start to fall through the cracks. In some of the programs or things that were successful, actions start to drop off because there's not necessarily somebody set up in line to make sure that line is being held. I think it is imperative at that point. It is difficult to run the business and be in the business. There has to be a separation at some point for middle management or upper-level leadership to come in and support in that capacity.

Every single person is an essential team member to make the whole thing move. Click To Tweet

Your growth in the company, your management, and the oversight was essential to our growth in the clinics at the time. Our conversation is a lot about that. How do owners grow leaders, whether that is in the PT industry or outside of it? It is something that takes time, but it also is something I think, because we do not have that training from the past, we do not intuitively know how to do it. Maybe there's not a lot of books on how to develop leaders.

There's a lot of books on how to become a better leader and better owner. Maybe that is the next book you need to write is how to develop leadership teams. We do not have that training in the past. That is what we want to get to is how do owners train their leaders? In saying that, if you want to preface anything, that is fine but where would you start?

I think it is very important. I know that when you are an owner, you go in with a vision of a clinic and we're coming in as PTs. We're PTs, but in PT school, we're not necessarily given the tools or even a course on how to open up a practice. That is something that is missing in our profession as a whole. We do not necessarily come in inherently knowing how to lead a team and be a leader of multiple people outside of treating our patients. Oftentimes, that is what happens.

We have great producers that come in. Immediately, a great producer becomes our leadership because they have the ability to turn out a product and have a high capacity of production for the company. Some people may inherently come in with some tools, but that still needs to be developed. The first thing that I would think of is it does have to start with ourselves. We have to do our own work. We have to develop our own leadership voice that comes from surrounding ourselves with people who know a lot more than you.

PTO 156 | Leadership Development
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It's coaches and mentors and reading the books. I have a myriad of books here that I have gone through, from E-Myth Revisited, Leadership and Self-Deception, Crucial Conversations, and Good to Great. Five Dysfunctions of a Team was pivotal for our team. One of the ones that I'm gravitating to which do not to underestimate the importance of emotional intelligence. I have this book by Marc Brackett, Permission to Feel, which has been mind-blowing to me.

Those are the things that I found were important for us. Not even necessarily one book or one training coach. We've gone through the Gazelle, the Measurable Solutions, Scott Fritz, multiple people surrounding ourselves with thought leaders and people in that space knew how to help us grow to our next level, developing our own way of thinking and knowing the rights and the wrongs on how to approach a conversation and the importance of accountability. All these different things that a lot of us do not inherently come in knowing that I think are important to do. We’re starting with ourselves first.

As I’m thinking about our experience with you, we were sharing and we wanted you to read some of these books. It wasn’t scripted per se, but it was part of our leadership development. We wanted you guys to read the same books that Will and I were reading that we thought was super valuable. Even Good to Great and some of those books.

It was important that we share important books that we had strong beliefs in with those people who we thought were going to be our leaders and who were tagged to be our leaders at that time. We want to make sure that we’re having conversations about those things and get on the same mindset page. There is an assumption you brought it up in your preface there that we assume that good producers inherently become good leaders.

I do not think that is the case all the time. If someone is a great producer, they can see all the patients and get all the results. We inherently think they’re going to be great leaders and that is where they want to go. Sometimes, the conversation needs to start with them to be like, “What is your path? Where did you go?” You were upfront, if I’m not mistaken, with Will that, “I want to be a leader. I want growth.” Those conversations are crucial at the very beginning.

It is one of those things of even finding out what’s needed and wanted with the team going in like, “Is this even something that interests you? Is that something that drives you or is it something that you see yourself doing? Do you find comfort in that? Do you find energy in that?” It doesn’t do us any good to have somebody placed in that position who doesn’t want to own it.

We all have a purpose, a product and a key stat. If you do not even vision yourself in that purpose, then it is hard to turn out a product and the stat just dies. It is one of those things that is an important conversation to have. It goes along with developing that team and earmarking people. Only because they are a great producer doesn’t necessarily mean there are value-aligned, which goes into my second thing. First of all, you have to set a purpose and your values.

PTO 156 | Leadership Development
It starts with us. We have to do our own work. We have to develop a leadership voice, which comes from surrounding ourselves with people who know a lot more than you.

Set up the purpose of values first as a clinic.

Unfortunately, I still witness it in some of my coachings that it is something that is locked away in a cabinet or was developed at the start because people know it is important, but it is not breathed into the environment. It is not living in the clinic. It is not something that people even know. Maybe the executive team knows and not even the executive team knows the purpose and values.

I hear a lot of people when I go in. I’m like, “What is your purpose? What are your values?” They give me a tagline, which is great, but it is a valuable thing you need to build in your company because it is the foundation of how you will ultimately function. I would encourage people to develop those, spend the time, spend the effort, find out what’s important to you, figure out exactly what you value, and the ethical and moral fibers you want to bring into your company and have that happen? That then leads into the development and you are marking who your team players are.

There was a flection point that I noticed during our ownership and developing leaders like yourself in that. Will and I came up with values and purpose, and it was based on coaches pushing us to do so, like talking about those values on a regular basis. All of our weekly meetings started with us verbalizing the purpose and values in unison. For me, that was a little uncomfortable at first, but as we did it, I started recognizing that you and the other team members started taking it on. I thought this is weird that you guys care about this business as much, maybe more than I do.

It was valuable for me to see that other people could care about your purpose in the clinic. I always thought that was something that was here. It was within me and now it is Will and me. This is our thing and we developed it in a secret room in the back of the clinic. When we started sharing it, living it, and talking about it often with our team members, they started buying into it as well. That is where we saw a lot of growth and development of other team members and the growth of our business. There was a direct correlation between the growth of the business and establishing that purpose and values.

That is the basis of the culture that was being developed. Your visibility and sharing that with the team and giving people the opportunity to not only hear it but feel it and be asked, “What does that mean to you? What does that vision or that purpose mean to you? How do you see that?” Taking it even a step further where we were having a regular meeting, rhythms, and getting into a position of like, “How have you demonstrated that? How have you seen your teammates demonstrate that? How do you see that happening in our clinic?” That invites people.

It wasn’t uncomfortable, to begin with, but then everybody was like, “These are my people and they honor and we created a safe place for people to be heard and listened to.” Everybody wants to be part of something bigger than themselves. When you pull them behind the curtain and you share with them those visions, those values, and get to be a part of it, you do want to hear from them. I want to so badly. I do not enjoy standing in front of a team and talking to them. I want a team meeting to be something that is theirs. They are developing and their voices are being heard.

That comes from the development of those values and that purpose and breathing life into that. They become part of something bigger than themselves and immediately have an onus in that company. That is exactly what you want. I loved it or felt it more than you. That is me relieving my primary customer of the responsibility in holding that. I’m doing my job to allow you to do that.

As you start working, breathing the purpose and values, that is when a culture starts getting established. When you start developing that culture, you start recognizing that certain people fit and certain people do not. Either way that is okay, but you want to find those who fit, live, and breathe the same purpose and values you do and have also bought in. That makes it easy then to find the people that do not fit and find the people that do fit, then hiring and firing, holding people accountable becomes much easier at that point, doesn't it?

That is the third facet of what I think we need to talk about and what owners need to gravitate to because sometimes they are going to have a high producer. They may be value-aligned that are very low on the scorecard. You have to evaluate that and see if that is something that you want to carry through. This is hiring and making dismissals and even making business decisions based off of your purpose and your values. Do you fit? Do you align with what we’re trying to accomplish here?

We have the desired impact that we want to create within our team members but also our community. That has to be carried by the entire team. Not one person can do it. Not one leader, rehab coach, tech, aide, PCC or PT. It has to be a shared thing because it is something that is very valuable to the community and to the team.

It’s difficult to run the business and be in the business. Click To Tweet

One person that doesn’t align can make havoc in your clinic. It can cause A-players, high-value aligned and high production team members to leave your company. When you are breathing it into the clinic like we talked about and talking about it on a day-to-day basis, it makes for an easier accountability conversation because then you can clearly align or delineate where they align and where they do not align like, “This is not necessarily professionalism. Explain to me or help me understand why you did not take accountability for this,” or things like that.

It makes those accountability meetings, the hiring and firing, become so much easier. I guess we’re leaning more towards disciplinary actions and letting go of those people who aren’t value-aligned. When you can do that with a values-based conversation, it almost makes it more objective and less emotional than simply saying, “You went against one of our primary values and we can’t tolerate that. Here’s what we’re going to do next or we’re going to have to let you go if it is severe enough.”

What I also see is not only is it important in helping find those people but those people whose purpose aligned, they want to do more in the business. They want to take on leadership opportunities. You have PTAs that want to become clinic directors and more, like Stacy, not just clinic director but also marketing, supervisor and director of marketing, and did great. She was not only value-aligned, but she was in a company that she could fall in line with and found other ways to live out her desires and what she wants to do. There are opportunities like that come up when you find people who are value-aligned.

All of those things are 100% accurate. Sharing them, to begin with, so that people know those conversations become easier. Also, people start to realize, “I do not fit in here. You guys are drinking the Kool-Aid and have this desire to take this to the next level. I only want a paycheck.” Those people do not fit on our bus. Those aren’t the rock stars that we want. It creates an opportunity for other people outside of it to have that ownership. Even if it is not in marketing, VPO, or clinical director, we found that we had rehab coaches, PCCs, and billers jumping at the first opportunity they could to help like, “I want to be a part of this.”

I remember one time, Savannah came in and she was the rockstar for one of our events. She was going to do an insurance verification right on the spot. We have our rehab coaches, our techs or aides coming in, setting up and taking down for big events. Everybody wanted to be a part of this. I can’t tell you how energizing that was. That even took the pressure off me. It was like, “Am I needed here? What is happening here?”

When you find those people asking for volunteers, doing voluntary events and community events isn't a burden anymore. People are like, "I want to hang out with these people. You are my people. I want to be with you more. How can I do that?” Even if it is outside business hours, right?

That would belt off of our values, too, being in the community and part of that. Having a clear delineation of our expectations, you automatically got those people on the board because those are the people you are hiring, service-oriented, and willing to go above and beyond. I remember during our recruiting process. It is very specific that we're looking for rock stars and do more. We do not want people that are only coming in for a paycheck. That is all fine and good if that is what you want, but it will probably not be a sustainable thing for you and us.

As it pertains to leadership development, another aspect of things that I think is helpful in developing your leaders on the team is giving them some of those responsibilities. When the owner takes it upon himself to have the year-end party, do it all themselves, and figure that all out, you are wasting an opportunity there to develop leaders on your team. Maybe they do not have the title. They do not have to be clinic directors or marketing directors.

What if you had a tech or a front desk person who was in charge of it? Could you be okay with that if you gave them a budget, some parameters and let them go? Those are opportunities to develop leaders on your team to give them small things. Even thinking smaller, give them the opportunity to lead out on your staff meetings or the in-service. Of course, it is one thing to share purpose and values, have them read all the books, talk about them and all that stuff, then you need to give them some responsibility and say, “Here is a little piece of responsibility. Number one, it is an opportunity to do so and show us how you can do it. Number two, it is also an opportunity for us to see how well you do and how well you can coordinate the team.”

I remember being a very young leader and coming in and being like, “I have to hold everything because I want it to go a certain way. I want the pat on the back.” Also, all the successes were mine, but then all of the defeats were also mine. We started off by surrounding ourselves with people that know more than you. I want to constantly look at who’s coming up behind to take my job because that pushes everybody to the next level and pushes me as a leader.

Being that young leader, wanting that praise and accolade but also taking the brunt of everything becomes pretty heavy. Once I started handing things off, having people even write up programs, run the team meeting or do things like that, I realized that there was so much more satisfaction out of that. Now, at the end of something, we were a team like, “Look what we accomplished. Look what we did. We did this together.” I come from sports and a team background, so that is something that gives me a bit of energy.

PTO 156 | Leadership Development
Spend the time and effort finding out what's important to you, figuring out exactly what you value, what your ethical and moral fibers are that you want to bring into your company.

Also, it gave us an opportunity to not point the finger. It was like, “I should have done this. I could have done that.” In our debrief, if something did not quite go wrong, like, “That was my fault. That was something that I could have done better. I could have put a little bit more attention on that.” We’re winning together, but we were also going through some of the mucks together as well. It made you feel like a part of something bigger than yourself again and it wasn’t all of the weight of everything on your shoulders.

I know we’re going into your next point here, but to do that, it is imperative that you write down what is weighing you down. What are you working on that you need to delegate? This is how I abdicated responsibility. When I was a young owner, I would interview people and I’d say, “Your job is to do anything I asked you to do.” I literally said that. I do not know how many times. Of course, they were waiting for me to tell them what to do.

I was upset because they did not like to see a garbage can that was full and not dump it. I told him at the very beginning, “Your job is to do what I tell you to do.” They’re waiting for me to tell them to do that. That was my fault as a young owner. What I learned with coaching and consulting is the dirty work. The grind of an owner or any leader as you are developing a leadership team is to write down what someone else’s responsibilities are going to be, what your expectations are, and have those conversations about, “This is what I expect you to do and here’s a manual on how to do it as well. This is how we do things in your position to obtain your product and to keep stats high.” Writing all that up is imperative but it is a grind and that we do not talk about a lot.

It can be very cumbersome, which is why I think what you said is important. Leverage the team members that are doing something well. This is our job description, coursepacks, training manuals, your playbooks, or your hat packs, owever you want to name them. This is essentially the outline of your company's successful actions, how they’re done, and the steps to get them accomplished. This was something that took us quite a bit of time to develop and it was always in a revision state like, "How can we improve this even better?” It was never fully done.

I remember having a number of different packs that we had not only for the CEO, VPO, PT, or PTA, but we had a leadership hat. It outlined all the books we wanted you to read. It had all of those different ways of doing it. We have what we called our all-rise hat or an all-employee hat that went through the purpose product and key set of every single team member. Not only did I know what my responsibility was, I knew what everybody else’s responsibility was, so then I could support in whatever capacity I could to help them also get their product. Outlining all of that is important because it takes the pressure off of the owner.

I would love to survey your audience like, “How many of you were the primary accountability holders? How many of you are the primary holders of all of the crucial conversations? How many of you are in charge of hiring? Which ones of you are the primary holders of key relationships? How many of you are still out there doing all the marketing?” All these different things initially fall on the owner. When you start, you are it. You are popping upshot if you are doing everything on your own. There has to be a time where you are relinquishing that.

As you are hiring value-aligned team members, they are getting a rhythm. You are marking those that have a desire and a potential to be the leaders, and you see people doing things well. Ask them to write it down. “How do you have a successful day?” “Every single day, I come in, I look at the schedule, and I earmark all of my patients that are going to be either high risk for falls.” You are planning out. That is a successful action that maybe we know how to do for ourselves, but maybe that needs to be written down to be shared and put in those course packs or those playbooks for everybody to now know.

That is crucial in leveraging your team on how they do that like, “Tell me the steps of how you go about as an aid tech. How do you go about cleaning the clinic? What is your process?” All those things can be a little bit cumbersome but are essential because then it is not, “What does Nathan say? What does Michelle say or this owner say? What is the handbook saying?” That is how we do it. Everybody has a uniform way of doing it, especially if you are going to be in multiple clinics. You have to have a uniform way of doing things.

For any owner that has aspirations for multiple clinics, there has to be a common playbook between clinics or there is going to be chaos. It is going to be impossible to manage everything and handle all the things happening at once because everyone is running their own place at the same time. I remember I had a PT student who had spent ten years being attacked at some clinic in the past. I said, “If I paid you $250, would you write up what it takes to be a tech and what do they have to know?” She was like, “Sure. It is $250. I will take that.” I used that for years to train all my techs after that. I was like, “Here’s what you have got to do. Do that. Learn this. I will quiz you on it later, but these are our expectations.” It had exercises, anatomy, cleaning routines, and all that stuff. It is all in there. That was gold for me because I was able to use it over and over again.

As you said, for those owners who are reading who do not have any of this stuff in place, it is going to take some time. If you have anybody on your team, you could say, “They are a rockstar technician, front desk person, and physical therapist on my team.” Asking them how to do what they do and take fifteen minutes if you could. How do you get patient buy-in? How do you get a good arrival rate? How do you collect collections over the counter so well and get 100% every day? What do you have to do to get that done? Having them do some of that will be powerful and is a good place to start. As you take time away from treating patients, you can start writing up some of the things you will eventually want to delegate to somebody else.

Honestly, being that teammate and being like, "You hear me and see me doing good work and you want to leverage what I know. I feel seen, heard, and important. Now, I have more ownership like I'm part of the handbook." That is pretty cool. I'm not only coming to a place of work and being told what to do. I'm being asked what I do well. It is ownership, not only in the company but also validation for that person that you are working with.

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It can be huge. The fallback we have as owners are, “It is going to land on me. I’m going to have to do it all.” Hopefully, what they get out of this conversation is, number one, not only is it valuable to write up all this stuff. Number two, you do not have to do it all. There’s a significant portion that you may have to do. You are going to be ultimately responsible and organizing things initially. Try to find others, if you can, to do some of that work for you.

Have them do some of the write-up and you can put it together in the way that suits you and your company, then continual revision. It takes time. You do not have to do it alone, but it is a valuable way to grow your practice.

This goes to your final point, which is to communicate what your vision is like, “I want to eventually have a 2nd or 3rd clinic. I know that to do that successfully, I'm going to have to have a policy and procedures in place that are replicable over and over again.” While you teach those people who come on board, what were the expectations? Holding that communication line is important.

I think all of these things come together but also the regular communication, daily, weekly, monthly, quarterly, communication rhythm, and a meeting rhythm for the team. They know exactly what’s going on. You are bringing them behind the curtain. After a strategic planning session, now we’re delivering and cascading that information down to the team. They’re not, again, only on marching orders. They’re a part of something. This is your impact on how to move this clinic and these clinics together towards our ultimate goal for the company as a whole. Those are ways that we can bring communication into our team. Get their buy-in. Get their ownership in that as well.

Not only that, they have a uniform time each day, week, month, however you set it up. They know they’re going to go over their values. They’re going to highlight things, present their stats and answer the questions, but they’re also going to be there holding that meeting and being heard. They’re part of the team and part of something bigger. Once you have that regular rhythm, that also breathes into the culture. You have a uniform way of communicating information. You know when you can bring things to the table when you can’t bring things to the table. It also relieves the owner and the leadership as a whole because you do not have like, “Do you got a minute? Can I catch you for a minute?” You know our regular meeting rhythm. Maybe you have office hours, a private conversation, or put that on the parking lot.

That is something that we can bring up to the entire team because if you have that question, there might be other people within the company who have that same question, have that same desire to do something, change something, or work something out. It is a uniform place for everybody to communicate, be heard or be seen. Also, speaking of our values, see the company's greater vision and see how they can be impactful in that.

If there is no consistent communication, people are going to blurt out in the middle of patient care without raising their hand and say, “What is going to happen on Christmas?” That has happened to me in the past. I’m working on somebody, someone comes up to me and asking me about paid time off. “I’m with the patient. Right now is not the best time.” If they know that there’s a consistent communication method and way an oral communication line, they can bring up those questions and concerns, and there is some structure to it. The consistency of communication also provides opportunities for the leaders to shine because you can see them either leading out in discussions when there’s a group discussion as an owner.

The worst feeling in the world is, “How are we going to improve our arrival rate this next week," and then get crickets. You want those leaders to step up and start talking during some of those conversations or if you probe them a little more, they have more depth, have a little more insight, and are also willing to take responsibility. When you have those communication opportunities, that is when some of your leaders are going to step up.

We’ve seen it time and time again. We’re bringing some people on no matter what the position PT, PTA, tech or a PCC sometimes. You are like, “That was a valued well comment.” That is something that I did not consider because sometimes, even as owners and people with big visions and strategic planning, we can get a tunnel vision of something around certain items. To hear perspective from other people that maybe have been new to our industry or not even a part of our industry and coming in, and saying like, “We’ve attacked with something similar to this. I’m not sure if it works.” It is like, “That is gold. I love that.” Seeing that pop up during those team meetings is important but regular consistency is key.

I have also witnessed, unfortunately, in certain times where you set a meeting structure but then the volume of the clinic goes up. All of a sudden, the meetings drop off of the schedule then it becomes something that is not necessarily conducive to building that culture and open line of communication. It is something that wasn’t valuable for somebody to put on our parking lot or wanted to bring up for discussion is now tabled for another week or something like that. It is defeating. You have to stick with them. Sometimes it is difficult because it does.

It could potentially take away from patient care hours, but I will tell you that time will make up for its weight in gold. You will have more streamlined communication. You are not having one-off conversations throughout the week. You have a specific, dedicated time for all team members to hear the same information in the same unit of time. It saves you a lot of work as an owner or as a leader.

PTO 156 | Leadership Development
When you pull them behind the curtain and share those visions and values, they get to be a part of them, and they feel like you want to hear from them.

This is also an opportunity if you are having those meetings for people who are getting training to take responsibility. You are having accountability meetings or maybe they're not necessarily disciplinary in nature, but you are having a monthly or quarterly one-on-one with your team members. If you have someone who's in training, they can sit in on those meetings as long as the other person is comfortable with it. Give them the opportunity to see what that looks like from a leader's perspective. Even though they've been part of that in the past, you can be a part of that planning and assessing after the fact with that person to help them train and communicate how that coaching session went or how that accountability meeting went. There are opportunities galore within that structure to have potential leaders step up and get trained.

I love that you brought that up. It is not always disciplinary. Some people think of accountability as a dirty word. It is like, “I’m going to be held accountable.” It is one of my favorite values and I love it when teams have it as one of their values in their company because I see it as an opportunity for improvement. I care about you enough. I love you enough that I’m not going to let you continue to make the same mistake. I’m going to coach you in a direction that will help you be a better service to the company, but it is also going to improve you personally. That is how I see the accountabilities.

We’ve done that in the past too. If I’m the company's primary owner and holder of all the accountability conversations, you bring your number two in with you and they watch you do it once. The second time, you are still in there and you are seeing them do it, so then you can give some coach points and say, “This is where you could have improved in that or you knocked that out of the park. You are ready to fly on your own.” You are then gradually working yourself out of that picture and maybe you are not in the next one. It depends on the leader and how they’re going, but it is a good rhythm of how to work yourself out of that responsibility.

I can imagine most young owners or newer owners are going to look at those meetings and be like, "How can those happen without me being there?" They still go. There's going to be some trepidation initially, but that is where you develop them. You get them to the point that they have gone through the processes we've talked about. They have worked on themselves, shared that with others, develop strong purpose and values, made the right hires, developed write-ups and hats that these people have followed, trained, done well, and producing well in their positions and responsibilities.

You have given them a little tidbit of responsibility, but that one thing, the one-on-one interaction where the door's closed and you are not present, as the owner, can be one spot where you'd be like, "I hope that goes well." There are opportunities there in training your team and your leaders to do that with you and do it a number of times if you have to so they get it right. You feel comfortable or spontaneously sit in on a few if you want to make sure things are still going well. They can happen without you if you are intentional about the training of the leadership team that is going to take over that responsibility.

Taking all those steps that we talked about makes those conversations a lot less sticky. They’re not emotionally based, value-based, and objectively based. There are so many things that, “This is not in alignment with our purpose, and this is not an alignment with our values.” These metrics are out of whack like, “What’s happening? Let’s take a look at your sub stats.” It makes the conversation far easier. Oftentimes, what I have found in our previous working career together is people are already coming in there knowing exactly what we’re going to have a conversation about. It makes it less like a confrontation or an issue for the owner or the leader to have to do because it is like, “I know my stats are down and XYZ has a reason. This is what I’m going to do to make sure that that is not the case next week.” It is like, “Great. I’m so glad I can count on you. Thanks for coming in prepared,” it makes it a lot easier.

The goal for most owners is to get to a point where they can trust other people to carry out their purpose, vision, growth and goals of the company, so all the burden is not on you. There is some shared lifting. There's so much joy when you can create an environment in which others align with you and work on getting together towards a cause. It is fulfilling in that regard.

It is legit magic.

One question for you. We had a number of consultants and coaches during our time working together and you got some individual coaching from them. I'm sure a lot of that was valuable. Would you say it is imperative to have a third party like that provide you some coaching that is not directly coming from owners?

I personally think so because it is somebody that can see from an outside perspective and maybe look at it from a different angle. They're not fully immersed in the company and all the things that are day-to-day operations. They can help you look at the bigger and wider degree, things and other considerations that can be brought to the table. I thought it is invaluable that people outside of our company were added to our mix.

Did you feel like you could say things to them or talk about things with them that you couldn't talk about with the owners, whatever that might be?

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To a certain degree, yes. You felt like you could go a little bit deeper with our relationships and the owners. We created such a safe space that you did not necessarily hold back too much, but maybe there were certain areas that you are like, “This is an expectation and I do not necessarily agree with that. How do I handle that? How do I bring up the point?”

You can talk that out with a coach. It is like, “These are the expectations. I see where they’re coming from, but this is my angle and my view. How can I make that clear to them? How can I have that conversation in an appropriate and respectful manner but come to a position where we’re getting a conversation on the table of something that has currently been a program or a policy?” It is helpful to get that outside perspective of how to even address conversations with your owner or other leadership team members. Not every single day is a rainbow and sunshine. There’s tough stuff that gets done behind the wall.

So much of what I talked about on the show is about owners getting coaching, which is imperative. 99.9% of the people who are successful that I talked to have had some coaching and consulting in the past. After having this conversation, I recognize that I haven't stressed much about having the owners get coaches and consultants for their leadership. That is coming to light to me as we're talking. We provided coaching. Not only we got coaching for ourselves, but we also got coaching for our leadership teams, then thinking about the development of the leadership team that we had. You guys got a ton of value from coaches helping you out and not only straight from the owners.

As we even grew and developed, we had our middle management people involved in our strategic planning. We’re getting directors on our two days off sites together quarterly. We would have directors with us one day and they would go back to their clinics, then the executive team would stay for an additional day. We got insight from the people that are in the clinics doing the work. We had even more and I have gold. Now they are behind those decisions and it is not marching orders. They’re going into the clinic being like, “No, they heard us. They listened to us. They want to do this. We are a part of that. This is what we came to a decision about.” It was important and getting them exposure to those types of thought leaders and people and that way of thinking. Not only like, “I needed to see my new patients.” It was great.

How did it feel then as a leader for us to present to you as owners like, "You are going to get some individualized coaching from someone who coaches us?”

I was giddy. I was like, “Yes, please. Whatever I can do.” It was part of our culture too. We always looked at our primary customers. Every single person on the org board and the communication line had a primary customer. For me, that was our owners. Eventually, I became a partner and people were doing that for me, but my job was to offload my upline. If I had the coaching, I had the capability and I got to service my leaders in that way by having the coaching that you were giving me the opportunity to participate in. I was overjoyed to be able to be a part of that.

PTO 156 | Leadership Development
We have a desired impact that we want to create within our team members and also our community. And that has to be carried by the entire team. Not one person can do it, not one leader, not one rehab coach or tech or aid or PCC or PT.

It is something that I thought about as we were talking about this. It is something that I haven't pushed on the show before or shared a lot. Many owners have leadership teams that could do well to allow their leadership teams to get some one-on-one coaching as well.

It doesn't necessarily have to be at the same rhythm that the owners are doing, especially if we're empowering them to do some of it. I think it is valuable. It should be a part of the path to offloading yourself and getting your leadership some individualized training.

Anything else you want to share about leadership development? At this time, we covered a ton of ground. I want to give you the chance to share anything that you might have thought about during the discussion.

We covered a lot. It is a true passion of mine. I love to see the light bulb click on for leaders, helping go through that coaching process, and see people get to a position where they make decisions and feel confident about it. That is part of that coaching and training process as we go through as coaches and consultants. I’m here to be of service to people just as you are. I hope people found value out of this episode. It is an absolute joy to be on here with you. Thank you.

 If people want to reach out and get in touch with you, how would they do that?

You can reach me on my email. It is I'd be happy to have a conversation around your needs and wants and see where we can meet that.

That would be awesome. Thank you so much for taking the time, Michelle. I appreciate it.

Likewise, it's always a joy.

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About Michelle Bambenek

Michelle Bambenek, PT, DPT has spent years as a successful leader and developer of leaders within the physical therapy space. In this episode she breaks down the critical components of leadership development - granting team members opportunities to grow and live out their purposes. This aspect of ownership is essential for the expansion of the business. The owner can't do it all and must rely on others to follow successful patterns in order to grow. If you're looking to expand your PT practice consider these 5 steps first.


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