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Physiotherapy bill format for Sales

what's up guys let's have a conversation about profit margins as it relates to a physical therapy private practice i'm going to share some numbers from u.s physical therapy i've shared these numbers every year for decades now sometimes privately within my group sometimes publicly on youtube you can go back and find some of the old videos but i think it's great to benchmark yourself against established businesses to see how you're really doing and i'm going to tell you that most therapists most private business owners in the profession of physical therapy artificially inflate their numbers i think it's unknowingly i don't think you realize just how small the profit margin actually is if you back out all the related costs that you're doing for your business you're managing your business if you hired somebody to manage your business as well as you do how much would you have to pay that person that is an expense that comes out of what should be figured in when you're calculating a profit margin so let's take a look i'm going to show you actually how to actually find this information let me for some reason i didn't have this formatted properly okay so if we go to us ph financial report and we go into their website for sec filings let me get some more space whoops some more space over here there we go we're going to look at the 2020 uh 10k i know this looks just like a ton of gibberish but i tell you what you can really gain some useful insights from their annual reports and filings i love stuff like this like if you look here items 1a risk factors this will talk about the identified risk factors to the business to the profession this is going to be risk factors that you're dealing with also there are some really great pieces of information in here that i'm sure you're taking into account you know like here they talk specifically about mppr um therapists are asking me about mppr all the time they don't fully understand what it is why it's affecting them so greatly but you know if you read the annual report for a company like this i'm trying to resize this so i get everything we need on here you will see this information it's absolutely public information uh hang on a sec guys i wasn't ready okay but what we're going to look at specifically is let's jump down to page 46 and this is where we're going to look at some of these numbers looking at net patient revenue this is december uh 31st 2020 compared to the same 12 months previous year 2019 and 2018. these numbers are in thousands so when you see 373 000 it's actually 373 million um but we can we can come up with some rough percentages based on what we see here so taking a look at this right we've got our net patient revenue 337. okay we come down here we look at salaries and related costs that accounts for 235 if we do a little quick calculation 235 337 235 337 69 almost 60 almost 70 percent almost 70 percent of gross revenue is covering salaries and related costs uh i mean that's massive now granted that was 2020 right the year of the pandemic if we jump back a year we go with 274 and 433 274 and 433 we're looking at 63 percent still more than 50 percent of gross revenue is going to cover the cost of salaries which includes clinical salaries administrative salaries you know that's huge like and these guys have economies of scale these guys can hire they hire at relatively low paying price points they're not like a small niche provider like you or i they're they're paying their therapists at or below average rates then we come down here we look at rents supplies contract labor and other that accounts for 84 million we've got credit losses closures none of this stuff really you know salaries and related costs rents and supplies those are going to be the two main ones that we're looking at and when we add those two up and i'm going to use the 2019 numbers because they're more appropriate so we've got 274 plus 90. what i'm going to do here is i'm going to take this i'm going to say equals parentheses 274 plus 90 run that number 84 of gross of what was what are they calling it net patient revenue 84 is going to those two categories and this is pretty typical it really really is and then if you come down here so we've got operating income uh relief taxes they used to have corporate office costs here we go corporate office cost that's another 45. so i'm going to come in here i'm going to add another 45 and now we're at 94 percent um 94 when i think of corporate office costs they used to classify that as management cost management related costs i think is what they used to say that's the thing like when you think of all the stuff that you do for your business right somebody has to do the hiring somebody has to do the firing somebody has to review the numbers and plan for the future and and organize the the company in such a way that it's going to continue to grow and innovate and thrive in changing environments who's going to do that now i understand you do that as the owner but if you were a passive investor just like somebody who bought a share of stock in mcdonald's i'm not sitting in on board meetings and i'm not cleaning the toilet i am simply a stock owner share owner i don't know if mcdonald's is paying dividends or not but i would get passive income from that if they do otherwise i just want my shares to appreciate as a passive owner of a physical therapy practice you should not be the one who's making those decisions there should be a leader in place now if you're going to be that leader you're going to get paid to be that leader but if you're not that leader you have to deduct that income right so you're probably getting paid to treat patients you're probably getting paid to run and lead the organization but as a true owner and if you're truly looking at the profit margin for the business all of those expenses have to come out my estimation in most cases is that the true profit margins probably like what you see here two percent five percent maybe seven percent on a really well organization that's got some cash cows that are just pumping out tons of cash with relatively low cost you know in my company the therapy is great i do it because i love it it's a great huge part of the business and without it i probably wouldn't have the success i have on the digital side but the digital side is my cash cow when i create a digital course when i sell a digital product that is almost a hundred percent profit so if i can make a hundred thousand dollars in a year on the digital side with virtually zero expense assuming i'm not marketing and doing other things that would be the equivalent of a million dollar revenue producing physical therapy practice that has a 10 profit margin because once those digital products are created it's virtually zero cost to have them continue to operate and generate income and so it's just astounding to think how much time and effort and and sweat blood and tears we dedicate to patient care when in reality we could quadruple or 10x that number moving into a digital product world and then that world would pay us to do the things that we love to do that ultimately lose us money but make us happy make us joyful you know improve our quality of life which is helping patients achieve their goals so think about this stuff go check out the annual reports for u.s physical therapy and any other companies that are publicly owned publicly traded that you might want to learn more about read their prospectus read their annual reports read their shareholder letters you will find a wealth of information all totally free all totally accessible guys i wish you the best