Private Practice Financial Summit – Strategies To Increase Wealth And Retirement Hosted By Econologics With Eric Miller



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Private Practice Financial Summit – Strategies To Increase Wealth And Retirement Hosted By Econologics With Eric Miller

Nathan, how are you?

I'm doing great.

It feels like I haven't talked to you forever and it's been three days.

We talk occasionally. I had you on the show talking about great things, how to prepare for 2025, and wrap up 2024 financially. You know me. I love talking financials with you.

Challenges PT Owners Faced In 2024 And Looking Ahead 

You do. You're probably one of the few PTs I've ever met who nerds out on the finance stuff. I'm excited that we're going to do this together. This is our first PT Financial Summit. It is something that I want to continue to do because of a very weird year that I've seen for a lot of PT owners where their business has been growing but I still am seeing struggles on the finance lines, money coming in, and controlling money. We have to make sure going into 2025 that PTs have a plan or do something so that they can have a lot more success with money. That's where this came from.

They've had a lot of struggles in 2024, no change. Healthcare is a third party that disrupted a lot of payments so reimbursement. Also, the inflationary pressures. You can't discount that salaries are going up while reimbursements are declining. It's becoming more and more difficult, thus the need for more and more of this content to educate owners on what to do and how to prepare financially.

Eric Miller’s Background And Financial Expertise 

I love it. For those of you who don't know me, my name is Eric Miller. I'm the Chief Advisor and Co-Owner of Econologics Financial Advisors. We are a registered investment advisor that caters only to healthcare owners. We don't work with anyone else besides healthcare owners. We learned pretty early on that if we were going to be good at giving financial advice, we had to know something about our industry and business. That's why we focus on healthcare practitioners. Nathan Shield is one of the owners of the PPO Club. You probably have a long list of things that you've accomplished but maybe give a brief introduction of what you're doing, Nate.

I’m Nathan Shields of PPO Club, Founder and Co-Owner of the Private Practice Owners Club Podcast and coaching services. Being a physical therapist myself and PT owner for a number of years, I sold my practices years ago and decided to turn around and share some of the wisdom that I gained over the years. Plus, I have a great network of successful physical therapy owners, frankly, and influencers in the industry like yourself that I can connect with and put you in front of an audience to show these independent practice owners, “Here are the resources. These are the people that have been there, done that.” I do that through the show for the benefit of those owners.

I also do some coaching. I've started a coaching business. As you follow the show, I have my partner, Adam Robin, who is also a physical therapy clinic owner in Mississippi of multiple clinics. Our focus is to provide as much support as we can to these independent practice owners so that they can live the life they want to have, achieve their dreams, and be successful, grow, and expand. We're there every step of the way.

Your PPO Club has grown in 2023 tremendously from what I've seen. You put on an event every single year, which was awesome. You have a Facebook group that if you're a PT owner, you can join.

If you want to connect and see exactly what we're doing or a lot of what we're doing, it's on our Facebook group, Private Practice Owners Club. The website also has each episode and can put you in connection with us. It tells you a little bit more about what we're doing, who we are, and also the other coaches that are involved.

Let me tell everyone that we're going to be going over to the PT summit. First off, I'm going to go over what we like to talk about, which are the strategies that you're going to need to build personal wealth and make sure that you are on track for retirement. Nate is going to go into five things that he learned along the way. There's probably more than five but we're going to try to restrict it to five things he's learned along the way. After that, then we're going to start bringing on what we call our Financial Dream Team.

Nobody is going to go at this alone. It'd be foolish if you were going to try to. You need to have a very solid financial team around you that is competent, knows your industry, and most importantly, knows exactly the direction that you want to go with your life and you have to build a team around there. From a financial perspective, one of the things that most people are missing is a very good relationship with not only their financial advisor but with their CPA.

A lot of people have CPAs and work with CPAs but there's a difference between having a CPA who's doing your books and having a relationship with a CPA who is helping you understand your finances and strategizing with you, not only tax strategies but things that you're trying to do with your business to grow and expand. You need someone who can do that.

I'm very happy that we're going to bring on a CPA. Mark Martukovich is the present owner of Business Advisory. We've seen a lot of success with him working with private practice owners and a lot of other business owners. He's going to talk about what the relationship should look like with your CPA. We have to have them give a couple of tax strategies because it's the end of 2024. Everybody loves tax strategies. That's for sure.

I'm going to bring on Josh Abrahamson, who is one of my financial advisors. He's going to talk about some successful and unsuccessful things that people do with their money and investments. We see the good, the bad, and the ugly of what happens when people try to invest their money. He's going to give you some success factors that we've seen among our best owners.

We've got a big show. We're going to bring on Daniel Stewart of Athelas. He is the Head of Partnerships at Athelas. Athelas seems to be taking the PT world by storm a little bit in terms of what they're doing in the billing and the technology department, making it easier for owners and providers for record-keeping, and implementing AI technology.

Some of the things that you hear as an owner, I'm sure you heard from your providers complaining about, “I don't like doing this.” How can we help with that? Athelas has come on the scene and is saturating the market, which is good. What they do is important from a billing and record-keeping standpoint. What do you think about that?

They're great. Athelas was a sponsor of ours at the conference. We were getting to know them a little bit more. Adam Robin, my partner, has worked with them as well. I can't say enough about them because I welcome them coming into our space. They've worked in other healthcare spaces before but physical therapy needs some disruption. We need to be shoved into 2025. A lot of us are still living in 2015 and 2010. We need a company like Athelas to show us the way to guide us a little bit more and introduce a better way of doing things. They are preeminent when it comes to leveraging AI technology in your revenue cycle management/billing and collections.

I'd probably go a step further in saying that if you do not adopt some of these things over the next years, you are going to be rolled over by some point. Not only your competitors but the insurance companies are going to be utilizing this technology to do what they seem to do that frustrates so many PT owners. You're going to have to fight fire with fire when you're doing this.

We don't want to get tangential here but I saw an article that UnitedHealthcare was found to leverage AI to deny 90% of claims right off the top.

It's a real thing. If these insurance companies are using it, you're going to have to utilize and integrate it into your practice so that you can make sure that you get paid. Part of the cycle of running a business is money coming in the door. If money's not coming in, then you're going to have a tough time doing anything else. We got to get the money in the door. He's going to give you some descriptions and a good story behind looking at Athelas for helping you out. That's the agenda right there. I'm going to start with what I'm going to go over.

I know that there are a lot of things going on in the outside economy. I always try to be sensitive to the fact. You had mentioned a couple of these things, reimbursements, inflation, and all these things that seemingly we don't have much control over, which is true, but my experience working with PT owners, looking at their finances, and digging down into why it is that you are not solvent, not able to pay yourself what you should be paying yourself, and you don't have a ton of money to invest and create other income sources, it has more to do with internal systems than anything else.

It is an inside job to this degree. You can solve this problem and the problem of having a good internal financial system of how when money comes in, where it's being allocated, for what purpose, and understanding financial planning to that degree. Financial planning isn't just some boring thing that you do to make sure that you have a few bucks in your pocket. It is the allocation of resources that will allow you to expand. That's something that's important that most people have to grasp and understand.

Three Key Financial Strategies For Building Personal Wealth 

I'm going to go over what we call three proven strategies to build personal wealth and make sure that you can retire. These are going to be your panels. These are beautiful pictures for crying out loud. I can't believe how young we look in these pictures right here but it's okay. This is sponsored by Econologics Financial Advisors. We offer what we call premier financial advice, not only for practice owners but for associates.

For the longest time, we've worked with practice owners. We've started to work with providers as well internally. I find that if providers have a good plan for themselves on money, they know how much they need to make and where it's going, they're going to work a little bit harder to make more money so that they can pay off debt and save for a down payment on a house. There's a good relationship between them and the owner. It isn't adversarial. It's like we're trying to get to the same place here. We're both trying to win financially but we'll get into that later.

I've talked about this a lot over the years but there is a point in time where you, as a PT owner, have to have a light switch that goes on. You're going to have to realize that at some point in time, we have to take a bit of a different view on how you're looking at the relationship between your household and business. When you are first starting out and you first start your practice, I know that most of your time, attention, money, or whatever it is is in the practice because that's where you spend the majority of your time. That's okay but there has to be a point in time.

I don't know when that is if it's 2 years in, 3 years in, 5 years in, or maybe right away, where you are looking at the fact that my household which we call the parent company. I need to treat this household like a business and make sure that the strategy that I have set up ensures that my practice profits are going to my household so that I can create other income sources. The worst thing that you can do is rely on one income source for the rest of your life. No one wants to do that but that is not going to happen by itself. You have to get a strategy and a plan in place to be able to do that.

The first concept is when you start grasping that, it’s like, “You're right. I got to do something so that I don't feel like this practice is taking every bit of energy, all my resources, and everything like that.” One of the ways that we can start that journey and doing that and going into 2025, which is most important for every owner, is to understand that by and large, I would say 95% of PT owners are underestimating the amount of money they need to bring into their practice to live the life that they want to live.

I probably even say it's probably closer to about 98% of owners. Why is that? We can go through a mountain of reasons why that is but the primary reason is that you are not looking at what I would call necessary expenses and incorporating them into your make-break number of your practice. What's a necessary expense? What is the necessity? Most people would think that payroll, rent, and marketing are necessities. Those are. You can't run your business if you're not making enough money to cover those things.

What about your profits? Are those a necessity? By and large, when I ask somebody how they gauge their profits, they'll say, “We look at the end of the month and see what's left over. That's how we target what our profits are going to be.” I'm like, “That is a short road to insolvency.” The only way you're going to have a profit is that you have to make it look like an expense and treat it like an expense like anything else that you do.

Once you understand that concept and treat money differently when it comes to your organization, then the game changes. The first thing that everyone needs to do is start looking at, “Am I incorporating every ‘expense’ that I need?” To us, there are generally for-profit accounts that we see people are not accounting for. Once you get them in place, what it's going to do is change what your target is. I'll go briefly through what these are. We have a lot of other material on this and we can do a whole webinar on this alone.



The first is your owner's compensation. The risk premium or ROI being paid back to you is the first 10% of the practice revenue that should be going to you as an owner in a separate account called The Wealth Storage Account. That's separate from your pay as a practitioner and an executive. This is your owner's compensation 10% of the revenue. Revenue should be going into a separate account for the benefit of you and your household, and creating other income sources.

You have a tax account so that you can have money to pay your taxes every quarter and work with your CPA to try to get that number down. Have a business savings account so that you have at least two months of business savings so that you can manage better. You have buffers in the organization. If you have a bad month of collections, it doesn't crush the organization. Also, a business expansion and development account because you have to reinvest back into the business to make sure that you have good facilities, a number of other things that you would need good equipment, or whatever it is to make it easier for your business to operate and expand.

To me, these are the four most important accounts that most owners do not account for when they're doing their make-break number. What ends up happening is that you underestimate how much you need. That is where you can see what your deficit is once you recalibrate your numbers and then it'll give you a target. “I thought I needed $100,000. I need $123,000.” You can work with someone like Nate who can say, “Let's work backward. How many patient visits do we need to do at your reimbursement rate to get to that number?”



That's the first thing everyone should do. Know your numbers. You have to know them cold and they have to be correct for you to be able to win. Know your make-break number. After that, it gets into, “Eric, you said I need to increase my pay by 10% of the practice revenue.” You're going to thank me later if you do that. “What do I do with that money?” It's pretty simple. When it comes to having wealth, you have to invest.

I've seen this happen. People have $200,000, $300,000, and $400,000 sitting in their bank accounts. I'm like, “It's great but what are you doing with it?” It's great to have cash and liquidity but we have to keep money in motion. You need an investment strategy to win. The first action though is if you want to have money to invest, you can not leave it in your business account. You have to rip it out and physically remove it. That's what that 10% owner compensation is designed for. It gets removed from the business and goes into a separate account. That money then is used for an investment strategy for your household.

We put this together for owners every single day where we're showing them, “Your practice is an asset of your parent company, which is your household. It needs to compensate you enough in salary and profit distribution to pay for your lifestyle, taxes, and personal debt.” By and large, and Nate, you'd agree with me, that it would be advisable for everyone if they can get their practice building at some point in time in their career. It's not always possible but it'd be an advisable asset to acquire at some point in time, long-term investment strategy-wise.

It’s a huge opportunity for diversifying your investments if you will, but also establishing a source of wealth in the future. You're going to pay rent to yourself so that's going to take down the principle that real estate more than likely is going to appreciate. This is a wealth-building account. You can do so much with that, whether you decide to sell your practice or not to eventually buy other real estate opportunities and continue to diversify that real estate portfolio.

Long-term for most of you, if you're going to sell your practice, you don't have to sell the building and keep the building. It'll generate a rental income source for your household for infinity or however long you want to hold it on. Qualified plans. Most of you probably have 401(k)s and IRAs. By and large, it's a benefit for your employees. I take advantage of them.

I would not depend upon them alone and your practice “retirement,” which is why we want to make sure that we have a strategy of taking the 10% of the revenue out. It goes into a separate account called The Wealth Storage Account. From there, that money can be invested either into the traditional stock or bond portfolio. There are insurance-based products that you can utilize or any other alternative investments in real estate.

The point is you want to keep money in motion and in places where they have a proven history of returning your money to you in some form or fashion, which real estate, insurance products, and by and large, stocks and bonds have done. You've gotten your money back and that's going to produce cashflow for the household. At the end of the day, whenever it is that you are ready to transition, you have 1, 2, 3, 4, 5, and 6 different income sources, all for the benefit of the household. When you sell your practice, however it is that you sell it, you're not dependent on just the proceeds of the practice to satisfy your life.

I know that there are other strategies out there to create multiple income sources. I'm not saying this is the best. I'm telling you this is a very workable strategy but it will not happen by itself. By and large, you need to have someone working with you who understands this strategy and can show you how to allocate the money. That's what our advisors and I do on a day-in and day-out basis.

Another thing that's important is checking your financial readiness across the board. Your financial life isn't just made up of your investments. You have debt, credit, taxes, asset protection, and estate planning. You have a lot of things that you need to look at. You're like, “I don't have time to look at all these things.” Great news for you. We've done it for you because we have a financial prosperity index that all you have to do is answer the questions.

You can go to FinancialProsperityIndex.com. It's a 100-question assessment. It will give you a score akin to a credit score that will allow you to see where you stand in these areas. From there, you can develop a plan of what you're going to do to fix it. It's very akin to having business statistics. “What are my patient visits? What's my retention rate? What's our cancellation rate?” If you can see those things, then you know you can fix it. If you can't see them, you're not going to be able to fix it.

This was another tool that we created that can check your financial readiness. I would encourage a lot of you to go to FinancialProsperityIndex.com. It's simple and easy. It will probably rock your world while you're taking it because you're going to be like, “I don't even know what that means.” At the end of the day, you'll feel good when you see that there are things that you can do to improve. By and large, a lot of people have very good wins when they take that.

The last thing that is going to lead to what we're going to do after Nate talks is to make sure you have a financial dream team. What does that dream team consist of? When I say a financial dream team, this is what I'm talking about. I see a lot of value in the fact that we understand the PT industry better than any other financial advisor out there. I can say that with a high degree of confidence because quite frankly, I've been dealing with PTs for many years.

I know the nomenclature. We know where your profit margins and big expenses are. We can take a look at your business finances and say, “You got problems here and here.” That's not my job to fix that though. My job is to make you aware of that and make sure that you're paying yourself correctly so that we can take care of the household financially, which leads me to the fact that you don't want to drop down to four.

It's very advisable that you have a practice management consultant or some kind of coach who understands your industry and someone who has done it, has been through it, and knows what works and what doesn't. It’s a management technology that they rely upon but most importantly has done it. I see a lot of coaches out there that say, “I'm a coach.” I was like, “Are you a PT?” “No. I owned a car wash business so I figured I could give coaching advice to PTs.” Come on now. Let's stay in the industry. That's very advisable.

A good CPA and legal advisor would round out the financial dream team but to me, you need people that you can rely upon and are going to help you because you know it day-to-day. You have a ton of things that you have to make decisions on. That's something that we all need to make sure that we have people around us who know what they're talking about. That's what I have. These are going to be the people that we're going to be talking to for the rest of the time. I'm going to turn the ball over to you, Nate, if you want to bring up your presentation.

I feel good about my presentation because you covered a couple of the things that I'm going to cover. If I know that Eric Miller is backing me up on some of this stuff, then I have all the confidence in the world. It makes me feel so good.

I got your back. No doubt.

Eric invited me to the webinar. First of all, I feel grateful that you think I have something worthy to offer and valuable to share. Thanks, Eric. I'm excited about sharing what I've learned over the years. As I was putting this together, I thought, “What does my journey look like? What do I want to share with the people who are reading this?” I'm making some assumptions because the avatar that I speak to on my show is probably similar to the people that I'm talking to now.

You're a private practice owner, probably physical therapy, because that's where it was focusing its advertisements. I also am a physical therapist. Back in the day, I didn't know where to turn to to get support and resources. There's so much more now than when I opened up my clinics in 2002. I thought, “What do I want to share? What have I learned that would be valuable for the people who are reading this?”

I'm assuming you're like me. Maybe you have a clinic or you are the sole provider. There are other providers with you. You don't have a lot of business acumen. You're a great physical therapist and a high achiever. All physical therapists, in my opinion, are high-achieving people. We decided to open up a clinic and found out that we're a little bit underwater when it comes to the business side of things. I wanted to share some of the things that I learned along the way.

Here's where we are, where I am, and where PPOClub.com is on multiple outlets. I've been a physical therapist since the 1900s and a practice owner since the 2000s. Here’s a little bit about my journey as an owner. I wanted to share my experience simply because I think some of the people who are reading this can relate. It's also a very typical owner's journey based on my coaching experience. From my experience, I pray that other owners will be able to avoid the things that I had to struggle with over the years.

I opened my practice in 2002. Within a few years, I had no business acumen. I was a physical therapist who frankly wanted to have some autonomy and make a lot more money than I could as a staff physical therapist. I'm a little bit greedy in that way, and that's okay. A few years into practice, I found a location in a part of town that was growing. There was an empty space and I caught the vision. My wife said, “Let's do this.” I thought, “If I could have my space and get to about 150 visits a week between me and another PT and some support staff, I'd be satisfied. I could treat the rest of my life. I'd be fine.”

Two years into it, I'm making pretty good money but I'm already close to burnout. I'm handling all the administrative responsibilities myself and unhappy front desk people who are not only managing the front desk but doing my billing as well. It was not a good combination. I was treating 50 hours a week and I thought, “If I could get someone to run the business for me and I could live my life as a physical therapist, I'd be totally happy.”

What did I do about it? Frankly, nothing. Moving forward ten years later, I physically moved spaces to a bigger space and had grown and even opened a second clinic making more money, and still wished someone would rescue me from the administrative burden that I had to look at every day. Looking back while I was making all this money, I wasn't making as much as I could have, frankly.

That's where my partner and I, Will Humphreys, look back. We're like, “We lost hundreds of thousands of dollars.” We were losing money by not tracking it appropriately and not holding ourselves or people accountable. I was doing everything myself between treating, hiring, HR management, marketing, and property management. I'm probably cleaning the toilets when we have issues. I've got all my administrative duties. Thus, I was a jack of all trades and a master of none. Everything was handled with mediocrity and by the seat of my pants.

Even though I was providing good physical therapy by myself and the other providers around me, the business side of things went along. I was fortunate that we continued to survive. Although I was making good money, I also didn't have the life that I wanted. I had no life. I missed time with my kids. I had no time for hobbies. My vacations were interrupted by clinical emergencies, which is when all clinical emergencies tend to happen.

I got those calls in the middle of my vacation that the doctor had called upset about something. Frankly, I'd missed time with my newborn babies because I was up at 4:00 and doing notes out the door to the clinic at 6:00 or 7:00. I wouldn't be home until 7:00 or 8:00 at night. There were days at a time when I wouldn't see my newborns awake. That wasn't a life that I was envisioning or hoping for.

Nathan Shields Reflects On PT Ownership Struggles 

Finally, twelve years into ownership, I confronted the fact that I wasn't living the lifestyle that I wanted as an owner and that nothing was changing until I invested in myself. I had to improve myself as a business owner and nothing was going to change until I did that. I ended up paying a lot of money to get some coaching and someone to tell, show, and guide me on how to organize my business and frankly, my life and get what I wanted. Take real ownership of my lifestyle and not be at the mercy of the schedule of patients that I had before me.

What I wanted was time for myself and my family, space to do more for my clinic and team members, and guidance on how to grow all while maintaining my financial income. That was a possibility. I just didn't know how to get there. I invested in a coach. Frankly, it's paid off for me in spades. I've had a coach for decades. It’s some kind of coach or mentor. It’s not always the same one.

I've switched them up over the years but those coaches have taught me how to take time for my administrative duties, where to focus my attention during my administrative time, how to manage and grow my team, how to manage my statistics objectively, and how to plan for growth. It's paid off in spades. The amount of money that I put into it, I've more than gotten that return.

Over the course of a few years of coaching, our clinics went from $1.4 million in revenue to over $4 million in revenue while I wasn't treating at all. I can't say minor cog in the company but I wasn't boots on the ground treating patients anymore. I was looking over reports, talking with a leadership team, looking at high-level things, and looking forward to the future at the helm of the ship instead of being down in rolling the boat, essentially.

I had achieved a level of freedom and wealth that I had never experienced in previous years. Many years ago, my partner and I sold our clinics for three times the market average. Since that time, I've been podcasting, coaching, and investing in real estate ever since. It was a plan or a path that I never foresaw during that initial opening of the clinic period when I was like, “If I could treat patients all day, I'd be so happy.” I never foresaw that I could find fulfillment outside of patient care.

I want to talk about some of the things I learned along the way. We'll start with the first one. I looked at these like, “What would I tell my younger self to do? Especially in the environment of therapy, what would I tell other practice owners if I had a platform to navigate the challenges and obstacles that they're dealing with?” The first one I don't want to say is self-serving but it's obvious to me that we all need some kind of business training by investing in ourselves and hiring a coach.

I know that if I had some kind of coach or support system like a coach ten years earlier, I would have accelerated my growth and had a different trajectory that would have included a lot more personal time, family time, fulfillment, and frankly, money. The payoff for me has been 100 times what I put into it. When I consider the knowledge that I gained, the freedom that I achieved, the experience I had with my wife, children, my friends, and the opportunities that have opened up for me since that time, the result from that frankly is because I took on that mindset.

I am the owner. If nothing's going to happen, it all starts and ends with me. If I don't fix it, create it, address it, and fund it, nothing's going to happen. I thought naively that I could passively sit by and treat patients. Things would naturally grow around me because I'm a great physical therapist. Until I got the understanding that I'm a business owner and finally took ownership, that's when things changed.

Coaching showed me that. The sooner I would have understood that, the better my journey would have been financially, frankly. For independent private practice owners to move forward, they've got to take on that same business ownership mindset and be leaders, and change agents first in their clinics and then in the industry. The second thing I would recommend or coach myself on doing is to gain clarity on the purpose of the clinic. Eric alluded to this as well. That is essentially making sure that I focus on meeting my current and future financial goals.

I never took the time before opening the clinic to do a proforma that I should have done. I coach honors to do that. I never took the time to see how much I needed to make to cover my current and future financial goals. Having that clarity can drive so much more of the decision-making process. That's a question that I would ask anyone in this situation, “Are you completely clear?” Eric talked about it. “Do you know how much your household needs to both support the lifestyle you want to live and save for future expenses?” This number that you come up with should be a guiding light for the direction of your company.

It’s a very important number. I can't emphasize that enough.

I'm glad you brought it up and I'm happy to reiterate it. Having this clarity can cascade into a lot of other decisions and targets directly. “How much do you need to produce from your clinic to meet these expectations? What size of clinic do you need? How many providers do you need? How many patients do they need to see to meet that goal? What size is your support team?” It leads to a whole cascade of business decisions based on that one financial goal.

If we don't have that, we're flying by the seat of our pants and okay with whatever the bank account balance says. I'd rather see owners working from a place of intention versus randomness. I'd rather see you take control. That's part of that ownership mindset. Now that you have that number, you can cast a vision of where you're taking this business. This is going to be a guiding principle to exactly how you want to move and grow.

Step three is, frankly, to know your numbers. I'm so glad you said some of these same things so I'm not out in the woods. Just so you know, Eric and I did not preplan any of this stuff. We came up with this information on our own. I'm glad that we agree on some of these things. Know your financials and plan for a profit. Margins are squeezing clinic owners. In 2023, publicly traded physical therapy companies have dipped into single-digit profit margins for the first time in decades.

For independent owners to avoid the same fate and survive, they need to take on a profit focus. I personally would have set a stronger mindset too. This is to use Eric Miller's verbiage. “Demand profit from there.” The commitment to your overall purpose of treating patients better is important. That's Imperative. Establishing the values of an organization is super important. It has to be equal to the commitment that you make to the stated financial goal.

When you know your numbers and demand your clinic generate the profit that you need, that's a huge place of power that you can come from. It brings a cascade of decision-making forward and you can then run your organization powerfully. I've recommended Mike Michalowicz's book, Profit First. That ties back to what Eric was talking about. At a minimum, your clinic should be generating 10% of revenue for your household. It's an expense-light item. Setting that aside in a wealth-building account is the minimum you should be compensated for the sacrifice and work that you put into things.

The next step is to start to act like an owner and build your team. To do the first three things like implementing all the stuff that we're talking about or the coach wants you to do, living out the purpose of the organization, and focusing on profit, you need time to do these things. There needs to be a time to maintain clarity and commitment. Get out of patient care as soon as possible so you can focus on your business. It's easy for me to say that.

The best thing you can do as a clinic owner is to have a leader who is creating a vision and supporting that vision with policies, procedures, and staff training to achieve the vision and the stated goals. That clarity of your higher purpose gets obfuscated by the technical performance of the therapy. Your commitment to patient care can be a counterfeit to the proper end goals, which as an owner is a commitment to the business objectives first and then patient care second.

It's hard for owners to wrap their minds around that. It was hard for me to wrap my mind around that. All these years I spent working on improving my patient care became secondary to the business. Once you're a business owner, you've got to commit to the business. That's first and foremost. The business comes first. If you run your business well and give it the proper attention, patient care will be better.

You will be able to coach your team on how to treat patients better and they'll get better results. That will improve the community reputation that you have, which will drive more patients. They'll refer family and friends. You'll grow and train more providers. Your influence is 1,000 times instead of one-on-one with patient care. Lastly, simply run your clinic by objective statistics. Key performance indicators, stats, you name it. Have KPIs for every position in the organization. Challenge and support your team to meet the objective goals and desires.

This again requires time. You have to have the time to review your stats and know what your stats are. If you don't know what your stats are, that's why you have a coach because they tell you, “These are your stats that I want you to follow and try.” The results were not unexpected when you look at number 3 but numbers 1 and 2. When I ran my clinic by objective statistics, our culture improved. Our motto was we took from L. Ron Hubbard. He said, “Production is the basis of morale.” That was one of our mottos.

We know when morale was low, productivity was suffering. When people are busy and producing, they're happier. Our culture showed it. As our statistics improved, the patient experience was better. We were tracking arrival rates and stuff like that and getting patients in more often to meet their plan of care and they got better results.

Lastly is the higher profits. We made more money. In summary, as Jordan Peterson recommended in his 12 Rules for Life, the first rule is to clean your room. To create change in your immediate environment, first, you have to place that focus on your immediate environment and then you can work out external factors. You have to focus on your business first and then move out.

He's right.

Get some business training and coaching, claim your ownership mindset, and recognize that everything starts with you. Take it to heart. Clarify your goals and priorities, know that make-break number that's going to cover all your expenses and future expenses for your household, and cast the vision. What does that look like to achieve it? Generate profit with purpose and know your numbers. Knowing your numbers will help you build your dream life.

The future of PT ownership in this world isn't just about surviving, which it could be when we're squeezed like this but it's about thriving. We need to take the opportunity to improve our business acumen because it is the time to step into our roles as a leader by embracing and stepping into ownership, investing in ourselves, and creating clarity for our future. By doing this, we can redefine what it means to be a PT clinic owner and lead the way to a thriving, impactful future for our profession as we work on ourselves and our business. We can extend that influence out into our profession.

No doubt about it. We need to because we need PTs in our communities. We need you to continue to have thriving businesses. What you do is such a valuable service to the community but you have to think like a business owner if you're going to survive and expand because that's what's going to keep the practice there.

Solvency is one of the big priorities that a lot of us have to confront and make sure that we're keeping the practice solvent so that we can expand what we want to expand. It’s very cool. We're going to bring everybody else on, Nate. We're going to bring on Mark, Josh, and Daniel. I'm going to be on the side. If they want to ask a question, you can do that. We're going to start with Mark in terms of asking them a couple of questions from a CPA perspective.

If you want to connect with any one of the panelists on here, we're going to make sure that there's an offer at the end so that you can connect with them, talk with them, or schedule a time with them so that if you have questions that have come up in this presentation, you get them answered. We're at the end of 2024. CPAs are busy people. Why don't we go and start with Mark? How about that?

Thank you, gentlemen. Nathan and Eric, I love that you tell your practice owners that they need to know their numbers. That's something that we preach too because you've got to be able to make good decisions and have good information to make those decisions. Knowing your numbers is so critical. I'm the Managing Partner of a firm based in Clearwater, Florida. The name of the firm is Business Advisory and Accounting Partners. We take a different approach with our clients. We're proactive planners versus reactive as most of my industry tends to be. We love your approach, Eric and Nathan. I love all the things you tell practice owners. It very much aligns with what we do.

Top Tax Strategies For PT Owners At Year-End 

Eric and I did an episode a couple of years ago about what to expect out of that relationship with the CPA. If I want to have a good working relationship with my CPA, what are some of the things I should expect? What should I know?

There are a number of things that you need to think about when you're thinking about that relationship with the CPA. Number one is accessibility. Do you have access to that person? Are they responsive? I like to frame it in this way. Think of the accountant versus the advisor. An accountant or tax practitioner prepares tax returns. A trusted advisor uses tax returns as a verification of a plan and an opportunity to do future planning.

An accountant may answer clients’ questions when they come up but an advisor will anticipate the questions and answer those in advance of that person having those questions. Typically and oftentimes, people think about their tax account and they think that they provide pain because it’s like, “Here's the tax bill. Here's what I owe.” A trusted advisor, though, removes that pain and provides solutions to make it better or find ways to minimize taxes or be more tax efficient.

The last area that you should consider is when you write that check to your accountant. Do you view that as an expense or is it an investment? It should be an investment. That investment in that relationship with your trusted CPA advisor is valuable. It’s something that you want to do and not something that you have to do. When you think about your relationship with your current accountant, what is that relationship like? Is it an accountant or is that person an advisor? It should be an advisor.

People look to us as CPA firms and practitioners to be there. I frame it in such that I tell people that think of us as a board member, not somebody that's a CFO. We're not going to be in your business all day long or several times a month but we're there for you to answer questions. We have a lot of experience with working with multiple businesses. We can be that person who brings a different perspective and provides solutions. When you think of that relationship, is it an advisor relationship or a tax account relationship?

I love that you brought it up and framed it like that. I would love to be able to pay my money to a CPA knowing I paid him X amount of dollars but it paid off. I saved so much on my taxes because they gave me some great advice. What I love about CPAs that I've worked with, the ones that I like and what I recommend my coaching clients find in their CPAs, is simply someone who's going to communicate with you.

There are many CPAs who are hard to find, get pinned down, and aren't willing to talk to you. They just want to send you the reports when you need the reports. That's about it. One of the first things I did when I recognized that I needed to be a business owner was I told my CPA, frankly, “I need to meet with you once a month for an hour. I don't know how to read a profit and loss statement. I need you to teach me.” Gratefully, I had a CPA who was willing to do that. I had to pay him for his time but that's valuable. We need someone to not just advise us and help us with the reports but teach us.

It's important that they can connect with you at the right level too. Very often, and this is indicative of my profession, we tend to be back-office people and very technical. Sometimes, it's hard for CPAs to communicate with a business owner in terms that they can relate to. We pride ourselves on making a connection at a level where they can understand us and understand what we're trying to tell them. Tax law is not simple by any means. There's a lot of patience to it. We study it. To have the ability to take and translate that into terms that you as a business owner can understand and that we can teach you, that's very important in that relationship as well. I agree.

As we're coming into the end of 2024, are there a couple of tax strategies that owners need to have available or they need to know about but don't know about? Whether it's to wrap up 2024 or even a plan into 2025.

Timing in those conversations is important. They like to have those conversations starting in October before the end of the year so we can get ahead of the various strategies. A couple of things that come to mind, especially for people in the physical therapy profession. Maximize retirement contributions. You can do the 401(k)s but there are some advanced strategies. If you want to tuck away more money or take some of that money and put it away for the future, you can do defined benefit planning and profit-sharing plans that are tax deductible for the business. It's tax deferment to the individual.

Those are areas that we look at. If we have people who have lots of discretionary money, we tend to steer them toward that. Certainly, implement an accountable plan where you're reimbursing yourself as a business owner for things like home office, auto expenses, cell phone expenses, and the things that you have that are ordinary and necessary that might be coming out of your pocket that you're not deducting as a business owner.

Having all that buttoned up, defined, and documented is important because we see a lot of misses there. People don't mess deduct all the things they can in the form that they understand. The last thing I would think of, and this one maybe requires a little bit more planning, is practitioners who have the opportunity to own real estate instead of lease. There are some advanced appreciation strategies that can be very beneficial.

In tax planning, you cost segregations on the buildings and accelerate some of that deduction that you can take for that real estate asset. If you have the equipment, certainly there are other opportunities to take bonus depreciation or Section 179 depreciation. In effect, that's taking the cost of that purchase of the equipment or asset and deducting more of it in the earlier year. We're taking all of it in one year.

Those are the things you can make a decision about after the fact but already making purchases, before we file a tax return, we can choose whether or not we take that deduction or spread it out over time. The type of things that we're doing with our clients is planning for that. Know your numbers and make sure that everything's captured and right so that you can plan and forecast for the tax that you've got to pay on profits that you're making. Hopefully, there's a lot of profits there.

I love the idea of the wealth creation accountant, peeling money out, and funding. I do that personally and I tell my clients to do that. We have a lot of common clients with the Econologics team. I love that we're very much aligned in that strategy. You have to have money set aside for profit because otherwise, why are you doing it? I love everything you guys talk about. It’s very much aligned with the way we work with our clients.

The cost segregation opportunity is there. For those owners who have done well in 2024, it seems like it's more appropriate in that situation. If you haven't made a significant profit in 2024, you're relatively new but you also have the real estate, maybe that's not the best strategy in 2024 but as you grow, make a lot of money, and have a lot of money set aside in your wealth savings account, that's a great opportunity to save on taxes in those years, particularly.

It's not something that has to be done in the year you buy the real estate. It can be done subsequent to purchase so you can time that whenever it makes sense.

Thank you so much.

Josh, as the Econologics Financial Advisor, we're talking about how to save money on taxes and where to invest your money here at the end of the year with some of the retirement accounts that you have access to, especially as a business owner. Taking it a step further, what are some of the common investment mistakes that you see in people who have money set aside in the wealth savings account who are funding their IRAs, 401(k)s, and self-directed IRAs? What are some common mistakes that you're seeing once they have this money?

Thanks for bringing me on. The biggest mistake that I've seen a lot of times is people invest without an overall strategy or plan at the end of the day. A lot of times clients will come to us like, “I got X amount over here and X amount over there.” That's great. I'm glad you're being proactive and investing. I love it but what was the main purpose when you first started this account? Does it fit in with your risk tolerance, timeline, and overall goals?

When you invest, people love big returns. They’re like, “I want the biggest return in the quickest way possible.” Is that in alignment with the stage of investing you're at, the timeline that you have set up, and the goals that you want to accomplish for your family or business? Sit down and craft a plan with someone who understands like, “I'm a business owner.” Do they understand your business? What does that mean as an asset to you in the overall portfolio? As you're taking that cash, your business is risky. Do you want to throw it into another risky asset? Is there a different avenue to look out for investing?

That would be one of the main ones. To tie into the whole planning, they underestimate how much they need for retirement. What is the ultimate number for you? If you want to maintain a certain lifestyle, you might be shocked at the number you might need. Are we planning accordingly ahead of time for that? With those goals and timelines, that's where we got to pick the right investments.

As you talk about risk tolerance, most owners would think that their businesses are not a risky investment because they're betting on themselves essentially. It's not going to fail. I'm glad that you framed it that way. What you are owning and running is a small business. Small business in America has a small percentage that is successful for a long period. What are you going to do to counteract that? How are you going to diversify your portfolio so that you have some things that are less risky?

It's the industry with reimbursement rates. Every year, they want to cut your rate. Suddenly with the paycheck you thought you were getting, your average reimbursement rate is cut by $5. Maybe Daniel can help us with that but it’s those things that you're dealing with for this risk. I like betting on myself for sharing yourselves but there are a lot of factors at the end of the day.

You find it often and maybe I'm generalizing here but it's stereotypical that those physicians out there who make a lot of money tend to waste their money on risky investments. Am I the only one who's seen that? Do you see that in the physical therapy space as well?

For sure. Every industry has certain people in there who want to go the extra mile. Crypto has had a lovely run so everybody wants to put every dollar they have in crypto. Things like that are on the way. I don't think you, by any means, are an outlier or anything. Every industry does it. At the end of the day, it's making sure that you're not trying to chase those huge returns that are always there. You're not going to double your money every week. I'm sorry.

You work with a lot of successful PT clients as a member of Econologics. What do you see a lot of them are having success with either in the performance of their business or in their investment strategies?

The biggest thing that a lot of my PTs and I are all in sync with is production targets and communicating that with your practitioners and different departments. Everybody comes in and they get paid a certain amount but unless you set the expectations of what they're supposed to do then from a production standpoint, everybody always wants to get paid more.

Next year, when they come for a raise and they're already underperforming, you can't then pull the magic rug out and say, “You're not hitting your targets,” if that wasn't told them ahead of time. That can be, “What are your visits per discharge? Are you having people fulfill their treatment plan at the end of the day? What are your units per visit for each practitioner?” Making them also input their stats has been a successful thing and having the actual practitioners input those stats. They're responsible and putting it in. They might be embarrassed by the number. Give them a little fire to hit the golden at the end of the day. It's tracking those KPIs. You touched on a lot of them but reimbursement rate, pay or mix clinic utilization, and all those fun things at the end of the day.

I'm so glad you're using some of the same terminology and you're not a physical therapist or a physical therapist owner. You know the terminology. I love having an “outsider” say the same thing that I say. You got to know these numbers, your skilled units, your plan of care completions, and these kinds of things. The cherry on top of having them report, it reminds me of a quote, and I wonder if I have it correctly but that which is monitored and reported improves exponentially. I know I messed that up.

It’s going from, “As a leader, I'm looking at my KPI dashboard, making sure things are going in the right direction. If something falls off, then I go and talk to that provider.” Whereas if they are reporting it to you, they are seeing the numbers and you can even add the expectation. “If that expectation is below what is agreed upon or the standard of production, you need to give me a battle plan as to how you're going to improve it.”

That level of ownership instills accountability and productivity within the group. We can have a whole discussion on how to bring this to your team because they're going to be like, “You're all about the numbers.” You do have to couch it appropriately and bring in values, purpose, and all that stuff. Remind them of our purpose and values and how we track our statistics as a way of showing us if we're meeting our purpose and values.

I love that you bring all that information in or remind them that it's important, especially. What you're seeing is in line with what I'm seeing and that is the successful owners know their numbers, use those as a guiding principle to guide their businesses, and manage their businesses according to those numbers. It’s objective measures. It’s not just emotional, how we are feeling, what's the feeling in the clinic, or looking at the bank account balance and saying, “I guess we're doing well this week. We don't have any money in the bank so we're doing poorly.” That's not how to run a business. I'm glad that you're saying that. It’s very cool.

Daniel, we finally got around to the guy with the smartest software in the room. As Eric said, Daniel Stewart over at Athelas is using and leveraging AI to significantly improve the backend systems, especially the revenue cycle management of physical therapy practices out there. We're taking a left turn here but how do you see technology improving the field of physical therapy as a whole? You're a physical therapist. You've got experience in the field and you're a part of the Athelas group. You've been exposed to the technology now that you're in it. How do you see technology improving the field of physical therapy?

I appreciate you being willing to have me on. As Nathan said, as a PT myself, I had a number of years where I managed and ran a physical therapy company. I loved listening to Eric and your presentations about profitability and what to do from a retirement perspective. One of the things that you talked about, Nathan, is learning how to even read a profit and loss statement. There are a lot of PTs out there who don't know how to do that.

One of the most important things about learning how to read a profit and loss statement is realizing that you need more profit than you have loss. We live in an industry where technology has to be a part of our future. We have a lot of constraints when it comes to reimbursement rates as Josh mentioned when it comes to physical therapists coming out of school with $150,000 to $200,000 in student loan debts and expecting to see 8 patients a day and get paid $120,000 grand a year.

If you are not using technology to help maintain the profitability of your practice, you're soon going to go the way of what we're seeing a lot of other medical professions doing, which is being bought up by private equity, hospital systems, or worst case scenario, UHC is the largest employer of physicians in our country. Technology and how it's impacting the physical therapy space is super important because the more we can utilize AI, the more we can maintain profitability. That gives guys like Econologics and Mark to know and invest in your future as a business owner.

The ways that technology is going to play the biggest impact is in systems that are manually required by insurance companies. I'm talking eligibility checking, prior authorizations, documentation requirements, coding requirements, and everything that has to do with the billing and finally sending out and collecting patient responsibility. The more that we can automate those processes via AI or other automation methods is how the profession is going to continue to thrive or go back to thriving in my opinion.

Bring in a system that doesn't require your front desk person or someone in the back office to sit on the phone for 40 minutes and get insurance verification or authorizations. Do you mean there are systems that will help us do that?

There are a couple of companies, ours being one of them, that launched an AI call center, where they can have technology call payers to get eligibility insurance information. Oftentimes, those payers don't even know that it's a technology calling them. There are game-changing technologies coming out. Having a system that interacts with all of those technologies together is super important for the future of our profession.

When we're talking specifically about cashflow, I had Will Humphreys on the show and he was talking about how with AI, you can establish if-then situations. When we're talking about cashflows and potentials for claims getting denied, you can say, “If this claim gets denied for this reason,” which tends to be a very common reason for particular insurances, “Then this.” It will handle all that stuff for you.

Instead of getting the email or the letter sitting on the biller's desk and when she gets to it, she'll open up and do the work if she's available then or not, automatically in real time, the AI will process that appeal to the denial and cash will significantly improve. That's a great example of what you're talking about. That would have been a manual effort before is now simply automated and significantly improves profits quickly.

I'll even take that a step further, Nathan. The system, as those denials come back, not only has those if-then statements but then creates new rules on the front end to prevent that denial from happening again. We should almost never see the same denial every single time if it's something that's a repeatable pattern because the AI will learn from that individual denial, suggest a new rule to be built on the rules engine, and then you never see that denial again.

That frankly leads to the next question. You're more than a billing company or a technology company first. How can partnering with a technology company like yours improve the profitability of a practice? That's one example.

For anyone who's reading this, the company is not personally my company. To give you a little bit of background, we're based out of the Bay area and evaluated at around $6 billion. We're putting a lot of our investments into the PT space. While we do billing for all professions, PT is near and dear to our hearts because a lot of our team are physical therapists. One of the things that's an issue in our industry is that you have billing companies, EMR companies, verification of benefit companies, and sending out patient statement companies but one of the things that's unique about our company that's different from any other companies is we consolidate all of those tools into a platform that we've built ourselves.

Instead of Frankensteining a bunch of third-party partners into a platform that gives you your EMR and billing company, all of our platforms, because we're a technology company, are built by the same people. What that allows us to do is integrate AI into every aspect of the cycle. It also allows us to consolidate costs. When companies come to me and say, “This percentage is for my billing and I pay this fee for my verification of benefits. I pay a virtual assistant to do this for me and I pay an EMR,” we can oftentimes with consolidation make more efficient processes and that improves the bottom line of the business.

It’s very cool. Let's bring Eric back in. Eric, I've got another question for these guys. Think about what came up here in the talking to Mark, Josh, and Daniel that you wanted to highlight or dig a little bit deeper into. I wanted to ask the same question to Mark, if that's okay, Mark. What are some of the things that you're seeing in your physical therapy/healthcare businesses? We asked this question of Josh and Daniel as well but what are they doing to be more profitable than others? Are you seeing any trends?

I don't know that I'm recognizing anything in particular in the way of trends relative to physical therapy but business owners are more in tune with the staffing costs and trying to manage that. It's been the biggest challenge over the last several years. First, it was finding staff and then it's like you got to pay for the people. How do you manage and control those costs? How do you get people who are qualified for your practice? That's the biggest challenge that we see. It's where we see a lot of attention.



Our biggest expense percentage-wise is going to be our payroll expense by people. How do we make them most productive? How do we get the most out of them? How do we find the best? How do we make them aligned? I saw this as well. When I had the best people, that's when we were most productive. Running things by statistics made a huge difference.

I love Daniel's approach. I'm a big proponent of using AI. In my firm, we use it quite frequently. I love that you're bringing solutions, Daniel, that are going to harness that technology. People should not be afraid of AI. Those who can harness and use it to their benefit are the ones who are going to be well ahead of their peers. I hope people are going to go toward that space.

If you can be more productive in getting responses on these denials and even using them in general, that's where I see some big strides coming in the future. I'm excited about that technology and excited to hear that you're helping or finding ways to help practice owners use it in some fashion and harness that technology because that's going to be significant.

We're at a flexion point like we were years ago, Daniel. We were going from paper notes to EMRs. We're then going from not just EMR but AI-infused EMRs and all the capabilities that go along with it. There are going to be early adopters, mid-adopters, and late adopters. We're saying if you're going to be a late adopter, you're playing with fire, especially with the inflationary pressures that are around. Do you have any questions for these guys? I've been asking these guys all kinds of questions, Eric, but what did you take from it? What more questions do you want to ask?

Building A Financial Dream Team To Support Your Goals 

What I'll say is this. I heard someone say once, “Show me your friends, I'll show you your outcome.” When it comes to your financial readiness, financial expansion, or whatever you want to call it, show me your financial team and I'll show you how close or far you are away from there. What we've done right here is put together a pretty awesome team of people.

In any aspect that relates to your business finances or personal finances, you need to make sure that you have a good team of people around you who are competent, know what they're doing, have seen it before, and can put you in the right direction with a plan and a strategy that will get you to where you want to go. The struggle that a lot of PT owners have is they piecemeal this together. Maybe they get a recommendation from a friend here or, “Who did you use?” It's not a cohesive team. The biggest thing that I've seen is to make sure that you develop and have a good financial team.

At some point in time, you may outgrow the people that you've been working with. I've had three people say and I hear this all the time, “My CPA is a great guy but he's not giving me anything other than a standard thing.” I'm like, “It's time that you upgrade from where you're at.” It’s the same thing with their financial advisor. It's like, “They do not tell me anything new. They meet with me once a year and go over my portfolio review. That's it.” You need to demand more out of your financial team.

I would encourage you to connect with any of us. Let's face it. The decisions that you're making are going to affect your next 2 to 5 years. Getting these things implemented, integrated, and to the point where they become systematic and automatic, your life's going to be a lot easier in the next years. Don't wait. Do something. I promise you, you'll be better off in the long run.

Amen.

It's probably a good place to close right there, isn't it?

Nice job.

Closing Thoughts On Financial Growth And PT Ownership 

That's it. Thanks so much for reading. You can schedule with one of us or all of us. We would be more than happy to talk to you. PTs are more important. People are in pain mentally and physically. There's not a lot of people out there helping them. We need this industry to survive well and we need you to thrive well. We have people here who can help you do that. Thanks guys for reading. I appreciate it.

Thanks for having us, Eric. It was great.

We'll do it again. Be well.

Important Links

• Econologics Financial Advisors
• Private Practice Owners Club - Facebook
• Business Advisory
• Josh Abrahamson
• Athelas
• FinancialProsperityIndex.com
• Profit First
• 12 Rules for Life
• What To Expect From Your Accountant In Order To Improve Your Profits With Eric Miller Of Econologics - Past episode
• Will Humphreys - Past episode
• https://go.PPOClub.com/Linktree-Podcasts