Creating a Stronger Financial Practice in 2026

Cash flow, reserves, and labor efficiency ratio....most PT owners didn't get into healthcare for this stuff — but it's exactly what separates thriving practices from struggling ones.

This episode, we sit down with Eric Miller, Chief Financial Advisor and Co-Owner of Econologics Financial Advisors, who's spent years helping hundreds of healthcare practice owners strengthen their finances and build lasting wealth.

We cover:

• Eric's #1 piece of financial advice for PT owners
• What financial strength really means for a practice
• The biggest financial challenges owners face in 2026
• Key metrics every owner should track (including labor efficiency ratio)
• Common financial mistakes that hurt long-term stability
• How to improve cash flow and build the right reserves
• Warning signs of financial trouble — and how to balance growth with stability

If you want a healthier, more resilient practice this year, this one's worth your time.

Want to get better financial advice for your practice? Contact Eric at https://econologicsfinancialadvisors.com/! 

Transcript

SPEAKER_01 0:02

Hello and welcome to the Practice Marketing Podcast, highlighting successful strategies from North America's fastest growing clinics and experts so you can learn from their wins and power your practice growth. Hi, I'm your host, Neil Trickett, CEO of Practice Promotions. And today we're going to be talking with Eric Miller, the chief financial advisor and co-owner of Economologics Financial Advisors. And we're going to be talking about how you can create a stronger financial practice this year in 2026. So Eric has spent years helping physical therapy and other healthcare practice owners improve their financial health, increase profitability, and build long-term wealth from their practice. And as one of the original advisors at Economologics, Eric has helped guide hundreds of those healthcare professionals through important financial decisions, giving them the tools and strategies needed to create stronger, more sustainable businesses. We've worked with Eric for more than a decade now and his team for us ourselves and has helped us with our financial futures. And in this episode, we're also going to discuss creating that stronger financial practice for yourself and including common financial challenges that we see clinic owners face, how to improve your cash flow, and how the steps of finance in practice and how you can build a solid financial foundation for long-term success, not just for your business, but also your take-home pay and the life that you want to lead. So, Eric, welcome to the podcast.

SPEAKER_03 1:29

Thanks, buddy. It's good to be here. Good to see you. And I'm ready to talk money. Let's do it.

SPEAKER_01 1:34

And Eric has a great podcast too. He he talks for uh PT practice owners and different practice owners out there. So definitely follow him on his podcast too. He's got tons of great advice there. Um now, as you've coached a lot of PT practice owners across the years, what's been your sound piece of like your number one piece of financial advice that you give them?

SPEAKER_02 1:55

Well, I was gonna say don't borrow a million dollars unless you have a plan to pay it back, but uh I don't think that I mean that is kind of good advice, but I don't know if that's the best advice that I could come up with.

SPEAKER_03 2:09

Um I would say uh look, learn learn to run your household like like a business, I think is always going to be my best piece of financial advice. We get so lost in running the practice and become so overwhelming that we we do forget why why we own it and what we're trying to improve, and that's making sure that your household is is well taken care of financially and and never let it be um becoming an afterthought, so to speak. So that's the biggest challenge that I get. As you know, as a practice owner, you know, you were in the trenches and you're all you're just always trying to run the practice, grow the practice, everything's about the practice, and then our our households just like gets whatever is left over, and we we really try to like make sure that doesn't happen to two PT owners.

SPEAKER_01 2:55

I I would say for me, that was and and and Amy, my wife, I think that was really a critical change in my viewpoint when you told us that like 10 years ago, was that concept of that your household comes first, right? That's the that's the bank that gets paid before everything else. And then your your practice is the servant to that household, right? And usually, you know, we we're in this flipped mindset where you're right, like our practice, we think of it like that's the money machine, that's what's helping us serve people, but obviously at the end of the day get paid, and then you know, like it becomes this snowball where it'll eat all the cash that's going on in it, yeah. And then, you know, you're not giving yourself a strong salary, you're not taking dividends, and then you know, you're stressed at home because you don't have good financial income at home because the business is going through whatever it's going through at times. Um, but it if you change that mindset, like you taught us, that your house is first and it's that profit first mentality, like how this has a certain cash flow it needs to have, um, including your investments and everything. And then your business has to produce that increasing revenue towards the household. So I think that that is like the number one piece of advice that that I've got from you.

SPEAKER_03 4:14

And thank you for the title for the book, too, by the way. Because I think we took your advice on that as well, right? Household first. And uh Household first, love it. And yeah, look, real simple. The the practice makes the money, the household tells it where to go.

SPEAKER_01 4:28

Love it.

SPEAKER_02 4:29

Yeah, yeah.

SPEAKER_01 4:30

Sometimes we get so sucked into the mechanics of all the financial machine, right? Like we just forget the big picture. Sometimes we do.

SPEAKER_03 4:40

It's okay. We can always course correct. It doesn't take very long to change the directions on these things. There's a little bit of pain in it to start, but you know, once you get going, it's like anything else, automatic and systematic. It just kind of runs, and then you look back one day and there's like $200,000 sitting in your in a personal investment, and you're like, oh my god, this is kind of awesome, you know?

SPEAKER_01 4:59

You know, you I mean you've coached so hundreds and hundreds of practice owners, right? I I'm curious, have you do you do you find like that's a common thing? People coming in, they they want the they're they've heard the one, you know, piece of like they want the shortcut, right? Yeah, what's what's the one investment that's gonna make me a million dollars, or what's this one thing that's gonna change everything? Uh like is that something that you get commonly?

SPEAKER_03 5:25

It's often that, and I think as as things get harder in in our financial system that we're in, and they are. I mean, we have a horrible monetary and financial system in this country, the way it's set up right now, you know, and which we could probably just go off on a tangent in this podcast. But you know, it's just that money is being debased every single year. Thirty years ago, you and I, you know, could live on a on a hundred thousand dollar salary and feel like we're rich, and now it's just like you can barely get by on that. So I get this the struggle for that. Um so and I forgot the base of your question, but the uh uh what was that?

SPEAKER_01 6:00

Was it people were coming in like wanting to have that quick fix, right? Like the best investment that's gonna give me a 10% return.

SPEAKER_03 6:07

Yeah, the stress the stress is the stress is causing the the thinking of I just need a quick fix. I you know, I just need to make a big play here. And and I mean you can do that, but I I just think that the way that you handle money uh is always going to be, you know, of of utmost importance. And um, you know, I I don't know that there's just like there's not a magic pill for this, but I do I would say this it's it's you have to have alignment. And you know, the idea that it's gonna it should take like 30 years for you to be financially independent is a symptom of you not having alignment between the practice and your household. Okay. If if that's if you're on pace to be financially free in 30 years, then there's misalignment between what the practice is providing for your household. Honestly, you should be able to become financially free if you have a fairly viable practice. Um, your household should be financially free, I would say, in seven to ten years. Okay, where you don't have any debt, where you have plenty of money in reserves, where you have um basically a household that can operate all by itself. And, you know, okay, maybe it takes twelve, but it's certainly better than it taking this idea that it's that takes, you know, thirty uh I'm gonna be sixty-five before I'm financially independent. So just make sure that there's alignment between those two systems right there. And that's where I think a lot of owners don't have good alignment between those things.

SPEAKER_01 7:38

That makes sense. That makes sense. Do you see also uh just again in creating a stronger financial future for yourself? Like what can what can you do this year to to make your your business better, right? That's gonna impact your household, things like that. Do you see I because you know, being a PT, being a practice owner myself for years, um we're problem solvers, right? We love to DIY stuff, we love to try and fix problems ourselves. We love to try doing all the marketing ourselves so we don't try and rely on outside help. Is this is this like the same symptom in finance? Like, oh, I don't need an outside advisor. I can kind of figure some stocks or something myself or whatever I need to do financially with my business. Is it do people come to you with that?

SPEAKER_03 8:21

I mean, most people will have like maybe a local advisor that they're working with that's helping them with maybe some retirement plans and such, but they really don't have a good system in place of how to manage all of these things together. And they don't have like a real plan of like I mean, you know, I'm sure you asked this question, like what ideally what is the what is what is your financial, what's your ideal marketing scene look like? Well, I asked the same question on your financial scene. And I the answers I get are just like pretty symptomatic of the problem. It's not clear, it's not concise, it's there's it's not measured, it's it's it's confused. So I I think just getting clarity on some of those things and just like you said, you know, once an owner knows exactly what they need to do and and uh what what that looks like, they'll do it, they'll execute it if they have confidence. Um and because you guys are so smart, right? PTs are so smart, of course, that they sometimes get in their own way of trying to to do things themselves because you're used to that, right? But you you really can't I mean you can do that, you can spend all day on ChatGPT, which is like the worst invention right now for finan for solving financial problems because it just creates like seven pages of like, well, this could happen and that could happen. Yes. And I can just see now where it just creates so much confusion you know in the phrase. There's nothing like good practical experience too in in knowing what's gonna happen. It's like if you do this, this, and this, this condition will arise. I don't care what Chat GPT says, you know. So that's where I think real having you know real world experience and working with families and you know, like we have, like you have, is so invaluable to me.

SPEAKER_01 10:09

What is what does a strong finance um standing look like in a practice? Like, like, okay, because we can say, hey, you could have a strong financial practice, but what does that mean? Like what what kind of margins are we looking for? Like what kind of uh you know returns, what kind of like dividends, those kind of things that that should be coming off the practice into the household.

SPEAKER_03 10:34

Yeah, well, number one, there should be a lot of money uh coming in that is in excess of what the expenses are of that business, whatever it is. I mean, we always hear the margins, you know, of what of uh I mean, and they tend to go down. You know, I've had I've encountered now recently, maybe this happened about a year ago, uh, talking with some PT owners, and it's so amazing how fast like they'll hear something and then they'll adopt that as their mindset, like that's okay. Like saying, like, well, we made like a 7% profit margin, and you know, that's pretty good, you know, considering you know what's going on in the industry. And I'm just like thinking, like, oh my God, like what has happened? You know, like that's not you can say that, that's great, but seven percent is barely going to allow you to reinvest back into the business, pay your taxes, and maybe there's a little bit left over for you, but probably not. So it you know, you have to make sure that this this business is returning, you know, uh 20, 25 percent. I mean, let's like let's not cut it short uh with the risk that you're taking to be able to do that. Now, is that high? Maybe okay, but it certainly would allow you to, you know, I my mantra is build a practice to serve your life. And you got to build the practice to serve your life, and that means that the practice needs to produce a certain amount of money to allow your household to um you know be put into position where it's set for life. And so going back to your question, you know, I think certainly that profit margin is is really, really important. Um I can get into like how much I'd like to have in reserves and all those things. I don't know if you want to talk about that right now, but um, you know, that there's there's just certain that money is coming in easily, like there's there's good controls on it. You have like policies and procedures of um like approvals. There's just like a system like like uh like a CFO would do for a business that is controlling the the financial end uh of of the practice, like profit and loss statements are available uh easily. Um you know, there's there's just order. There's just order. You know, you can't you can't expand on chaos. And you know, that's the easiest thing to fix is just putting in good financial order into a practice.

SPEAKER_01 12:55

I think too that comes back to training, right? Because so as a when you kind of the typical scene for opening a practice and and even growing it through the years is that you were you were PT, you didn't like where you were working, so you thought you could do it better. You open up a business, and now you're treating patients, and then it starts to grow on you. You have to have employees, and I have to figure out how to run other people. Uh, then you you have the billing and insurance to learn, right? And all that. And then what took me a long time to to learn, I'm still learning a lot about it, is finance, right? Just even the terminology of finance and what was a profit and loss statement, and yeah, you know, what should the margins be, and like, you know, reserves and all these kind of like different, you know, financial terminology that you had to get used to and operate with and get better at and learn the whole skill of finance, right? In operating your business.

SPEAKER_03 13:49

You know, I'll say what you want about like corporations and such, but they they do know how to handle money pretty well. Yeah. And you can learn a lot. I have just watching them like buy practices and take over. And you know, I'll give you an example. One thing, you know, I've I've seen like any corporation that's bought like a PT practice, a big big corporation, you know, they they have like a 10% management fee that goes directly to the parent company, like the parent organization, you know. And I was always that was pretty validating to me because I like that's the first thing that I tell a lot of owners to do is to like take the first 10% of profit rev or uh uh revenue of the practice, pay that to your household, first and foremost. Okay. Uh, because I I learned that that's what corporate America does. You know, those are what these big corporations do. And you know, they you have to assign money a purpose. That's a that is an immutable law. If you don't assign money a purpose, it will disappear. And uh, you know, if you just understand some of these really simple, simple laws of money uh and you apply that to your practice, then you'll win the game. And if you don't, then you won't. And um those um those laws really aren't that difficult to learn.

SPEAKER_01 15:00

But um boy, they do what are some of the key ones there then? So they say like 10% towards your house to hold the plan.

SPEAKER_03 15:06

That's certainly one, you know. I think I I've touched on, you know, the uh, you know, make sure that money has a purpose, um, make sure that you put profit as a priority uh in the organization, make sure that you uh are utilizing um, you know, have the understanding that the practice is just is gonna try to con you talked about this, is gonna try to consume everything. It's okay, right? But one person needs to be in uh in control of the finances. You can't have multi you cannot have uh a financial committee trying to dictate things that that'll that'll break a practice. Somebody has to be in charge of the money. Um that that is uh that's really important as well. And uh just making sure that money has a place to go. And when you assign so for example, like you have taxes due every single year, every quarter. Okay. Like I don't uh I could probably bring up I get 10 new clients this month and I ask them, do you have a tax account? How many, you know, how many would probably say I have a tax account? Maybe two, right?

SPEAKER_04 16:08

Yeah.

SPEAKER_03 16:09

Okay. Like that is that's some that's a reality that you're gonna have to pay taxes. Or a reserve account. Do you have a business savings account that is there to for a purpose to make sure that this business can stay stable in in hard times? Okay. So just just setting up really, really simple things that allow money to go to a place and and having that, it creates a necessity. I have to pay this. I think you'd you'd said something like about like creating a bill. Like that's really, really important. Uh uh money does operate really, really well when it's when it's needed, when there's a necessity on there. And you know, trying to trick yourself into doing those things. I I know it's it seems like ridiculous, but you have to do it.

SPEAKER_01 16:55

Yeah, I totally agree. I think like so. If you want to create, if you're not doing this already for our audience out there, and you want to create a very strong foundation for your practice where you can go this year, like something that's super simple. You can, I mean, I read the the Profit First uh book, great book, super simple concept, right? Like just and like what you're talking about, which is create go open a few different uh money markets or check-in accounts or whatever you need to open, and just label them like one's a tax account, one's a reserve account, um, and then you have your operations account, whatever. And then every month a certain percentage, no matter what. Like, and I do it every week. So every week, a certain amount goes right in the tax account, it goes right in the reserve account, and then you have your other operating stuff, and you don't think about it, right? It's automated for you, and it's just happening, but then you don't like it's such a good feeling when I don't like paying taxes, but I don't have to like no you don't got this tax bill, and then where am I gonna get this money from? I never want to go through that again. I want to just make sure like there's something always set aside for that. Or hey, you know, something happened. Um, I mean, we've had practice owners that they had a fire, yeah. Their practice burned down, they couldn't operate for six months. Like, what do you have to cushion yourself and take care of your business? Obviously, insurance and things like that. But you know, there you could even you could have a down month, and and how can how can you coast through that if you don't have reserves in place?

SPEAKER_03 18:23

It is amazing to me how razor thin most practice owners are operating. And if you're listening to this, and uh I know that a lot of you are, you're razor thin, and you really don't, and you're like, well, we're just getting but we're making it right now, but I'm like, it's you're just you're a what a lawsuit, you're an audit, you are a medical emergency away from you know bad things happening. And I don't, you know, I don't like to operate on fear, but I just I I see the unpreparedness so much. Yeah. And it's really a a spot that you have to fix. And um, but it's not hard to do. You just have to, you know, put the good uh system in place for it to to rectify itself.

SPEAKER_01 19:02

One thing I've seen too, like once you once you kind of once you look at putting those better systems in place, even simple things like that, like that demand for income changes, right? And so you you realize like, oh, my business has to make this amount of money in order for us to fund the tax account in order to fund this on a weekly basis. And so this is what we really need to be, you know, earning and making. And and I see the the successful practice owners that we work with that we see that are crushing it are the ones that are more financially mindset. Yeah, and they also then know their worth. So if you know you need to, you got to kind of work backwards from everything, right? So, like if you know, hey, I've got to my business has to make this much money to to to bring the percentages into the household, to have enough in reserves, to have enough in the tax accounts. I work backwards from that all the way down to what do I need to earn per hour or per visit, right? And then then you can know your worth. So if if you have to make $65 or $70 per visit in order to have those percentages and cover your expenses and all that kind of stuff, then you're not gonna take that insurance that pays you $50 per visit. Like I'm gonna find a way to mark out market them, or maybe I need to bring in some cash lines of service or programs or things like that, or I need to renegotiate certain contracts, or I need to fire this particular insurance company to the network. It helps you make better decisions about your business.

SPEAKER_03 20:29

Yeah, and I I think that's it, you know, you have different payers, right? I don't know how people like categorize their payers like one, two, or three or a, b, and c. And I don't think there's any world that you should be ex accepting, you know, your lower tiers as as any more than 10% of your total reimbursement. Like if that's that'd be a good metric, I think, to start to to measure um, you know, whether or not you're gonna be profitable or not. Um, but yeah, I mean, everything you said is 100% accurate.

SPEAKER_01 21:01

Yeah. Uh so it all all everything you know touches each other. So like if you know the finance part of it, right? If you got the systems in place, if you know your KPIs, which you have to hit, yeah, then you can make those better decisions down the line, right? And one of the things that we see too, again, the real successful clinic owners that have 20% plus profit margins, they're figuring out a way to meet the demand of that per visit hour that they need to make, right? Or per like per hour or per visit. What is that dollar amount that they really need to make? It might be 100, 120 bucks an hour, 150 bucks an hour. Okay, now we know that metric. How do we get there? Right. And like I'm gonna like if I I can outmarket that. I know I can invest in my marketing, I can get certain kind of uh payer in here. Um, I can say, hey, you know what? I know that there's these other programs out there that I could sell sports performance, massage. Like whatever adjunct services to get that dollar per visit up. Like there's a lot of things that you can make better decisions around. But if you're if you're going the other direction where you're like, well, let's see how much money we can just make, and then we'll figure out what we got to pay on the other side of it.

SPEAKER_00 22:16

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SPEAKER_03 22:57

Yeah, working backwards, I think, is so important and it is it is so beneficial to know. Uh and it's an it's an eye-opening thing too, because if I if I tell you that your actual make break number is probably about 15 to 20% higher than what you're operating with right now, it's a it's a jolt to the system and it makes you feel like, oh my gosh, like what do I have to do? But when you really break it down on a on a I mean we've done this a lot with people on a on a daily basis, it's like, yeah, I know you're short right now, about 10% of what you need to you where you need to be at. But when we break it down, it's really not that overwhelming. It's really not that much. It's just maybe you know, a few more patient visits uh a week or a day or something like that. When you break it down like that, it uh it just makes it more palatable for people.

SPEAKER_01 23:48

And so that that 10 or 15% difference you're talking about, like that's their their profit margin or reserves or whatever they need to be putting away, right? They actually you you build that into the expense of the business, right?

SPEAKER_03 24:01

It's the expense mindset of the practice. Like I need this amount to like survive, and I cannot I cannot accept a dollar less than that. Okay. That's not how most people operate. Most people operate with this is how much comes in, this is how much going out, whatever's left over, I guess I can uh maybe I can take some of that or I'll allocate it from there.

SPEAKER_02 24:21

Yeah.

SPEAKER_03 24:22

Okay. The other the other mindset is no, a dollar comes in and I have to give every dollar a job. And but the those first, you know, that that first 15 to 20 percent is going into things that are going to allow for the stability of the organization first. Because my first responsibility is making sure that this organization can stay in existence and that it can operate and it can operate well. And so I have to make sure that that first 15-20% is going into things that I'm dictating it's gonna go into reserves, you know, my household, taxes, reinvestment back into the business, you know, those things that are going to allow for further expansion and growth. That's that's a totally different method of handling money than what most PTs have ever been taught.

SPEAKER_01 25:09

100%. I mean, I was there, right? I did not operate that way at all. I the same philosophy that I think most of people that come to see you at the beginning are the same mindset, like, hey, well, my expenses, you know, for every dollar that I make, my expenses are like 95%. Yeah. I think 95 cents, or I spend 95 cents on the dollar with paying staff and everything else that rent and everything else I have to do. And then yeah, I got five cents left over at the day, and I, you know, I kind of take that home. But it's very different when you say, well, no, you know, you've got you've got 15 cents of that dollar is actually gonna go towards your household and your reserves first, and then the other 85 cents is what you get to work with.

SPEAKER_03 25:54

Figure it out from there. Figure it out. Yeah, you know, make more from there.

SPEAKER_01 25:58

Yeah, trim some expenses.

SPEAKER_03 25:59

And look, it and it's it's gonna it's gonna confront all the things in your practice that are wrong. It's gonna make you confront unproductive people, it's gonna make you confront ineffective marketing, it's gonna make you confront um bad payers, it's gonna make you confront a lot of these things. It will uncover the camouflaged hole that you have in your business once you do that. And it's okay. It's like, you know, things are gonna break. It's all right, but I'd rather that you uh I don't I don't want you to operate like that for 10 years and just think that that's normal. It's not. So that's why we have to change it so radically. And you know, some people can do it, some people can't. And if those of you that are able to like, okay, great, this this is what the ideal should look like. I'm not gonna accept anything else, they end up winning, you know. And the ones that don't just can, I mean, you've talked to them, they just they're it's just bad news and rainy and and terrible every single time you talk to them.

SPEAKER_01 27:02

Yeah, you can either be at cause over in practice, or you can be the effect of it, right? Yeah, I'm sure that most people who went into business wanted to be at cause uh over it. And but they get beat up over time and they again don't know some of these financial principles, so then you know they're working very hard, but they're not really they are they're they're not seeing the fruits of of what all the effort that they're putting. Like I could just I could just be a PT somewhere else and make the same amount of money.

SPEAKER_03 27:29

Yeah, and that's that's a pretty glaring indicator that you have a wrong, you're doing things incorrectly if you're in that condition where um I'm just I seem to be money's going in, money's going out, I take leftovers. That's a bad indicator.

SPEAKER_01 27:47

And have you seen too, I mean, we work with a lot of multi-location practice owners, right? And so obviously they're scaling up to one, two, three, four, five million dollars. The sophistication of finance becomes higher and higher, obviously, the bigger the revenue uh in there. But are there any like certain mistakes that you start to see those type of practice owners make that you know, I don't know, maybe they overextend themselves or are what could they be doing better to be stronger financially in their business?

SPEAKER_03 28:17

I think they do. There is some level of the reporting, maybe gets a little bit more sophisticated. I don't know that the that the rules of money change too much, even in that one to three to five million dollar range. Uh the same principles will apply. The business will try to spend everything that it makes and then some. So that's always going to be true. And you know, there's definitely a a uh trying to expand too fast, I've seen, uh, and without getting, you know, like one location up to a certain level of stability. You know what that is, you know, I'll leave that up to you. I like to see it at least getting up to about I don't know, maybe 90% of its of a capacity before I'd start looking at other locations. But you know, I get yelled at all the time by people on that one. So I don't know.

SPEAKER_01 29:03

But like I mean, people will uh chase chase the status of I'm a multi-location.

SPEAKER_03 29:10

I have multi-locations. I know. I I'd rather have one big big location that's super profitable, gotta be a lot easier to manage, wouldn't it? Yeah, than than having the multi-location thing. But there is a status of like we're a multi-location PT practice. So I go, that's fine. But I've had people have 10 multi multi-praxes at a 3% margin. Like you just have a you have 10 headaches that are you know, and this and no value. None. There's no value there. Like, and then you're now you're just running, but you do have multi- you do have multi-location, so congratulations. But like there's that is that the result that you're really looking for? So it just goes back to like what result are you looking for? You know, and that's why you just it's so important to measure the financial progress of your household. And don't forget that, you know, and that's how I was like so happy. Like when you guys paid off your house, you know, it was like, God, that's such progress. I feel so good. Yeah. You know, like it's it's an amazing feeling.

SPEAKER_01 30:10

Yeah, absolutely.

SPEAKER_03 30:11

So there's got to be progress at the household.

SPEAKER_01 30:13

Yeah, yeah. Cause I mean, that's you you have to think about it too, like you know, with your partner, your spouse, usually, you know, having kids, there's a lot of demand for income, right? And I think the worst place that I I've been in too, like in in certain years, is when you're struggling at home with finding a job, right? And you're like, God, you know, I'm putting all this effort into this business, it's sucking all these hours away from my family, and you get frustrated, right? You get this frustrated point because the business is not producing for the home, right? The lifestyle that you're supposed to achieve because of all this you know, hard work and extra effort you're putting in as an entrepreneur. And so I think that's you know, again, for our audience out there, thinking with the household first, the house is better protected, right?

SPEAKER_00 31:05

Yes.

SPEAKER_01 31:05

And your family will be more on your side, they'll understand the commitments that come from the entrepreneurial lifestyle, right? That are needed. And at times there's more bloodsweat equity that needs to be put into the business to get it to that next level, right? There is.

SPEAKER_03 31:21

And look, there there's risks of ownership, of course. There's risks of not ownership, you know, and you gotta choose what your risks are gonna be. And uh I I I would choose ownership and all the responsibilities that come with that. Um but just knowing that you do have some control over your outcome and it's not an unwinnable game. And that I think that's you know, probably the one area that I I'm starting to see people succumb to the fact that they think it's a bit of an unwinnable game right now. And it's really not. It really I mean you got you got plenty of I have clients, you have clients crushing it. Yeah, crushing it, you know. Absolutely. And so it can be done. It really can.

SPEAKER_01 32:10

We I'll tell you one thing, like you got the pessimists out there that all reimbursement with decline, you know, we can never get out from underneath this, the student loan debt. Yeah, there's problems. I get it. Yep, but like you said, we have people that we know clients that are crushing it, right? And they're evolving. You know, we're in a we can't do business like you did 10 years ago, right? You you you can't operate a PT practice like you did 10 years ago. You have to be dynamic. You have to there's but we we've never had more opportunity now than than ever before. And we've got a three trillion dollar health and wellness industry that needs our help, that are so willing to pay for the services that we can provide them. And what are you doing to tap into that? That's my question to all the practice owners. What are you doing to tap into that massive market because someone else will, right? You know, your your gyms, your health spas, your, you know, your athletic trainers, your gyms, you know, you've got sports performance, you've got people that want to pay cash for alternative medicine help, they want to be fit, they want to be well, they want nutrition, they want to have weight loss. I mean, there's so many avenues that we could incorporate into our practice that people are willing to pay for, that have great profit margins. You just have to think outside the box, right? And I'm such a big proponent for the future of our profession that we can't be an insurance model anymore. Like that could be part of what we do, but the clinics that I see that are crushing it are bringing 15-20% of what they make in as cash, service lines.

SPEAKER_03 33:53

I was just gonna mention that. I think that's another metric you can look at. Like, I don't think any if you're at least 10% of your overall revenue should be coming from non-reimbursed services at this point in time. And if it's not, okay. That's an area you can get into, and it will help with cash flow, you know, but by doing that, it'll certainly should drive up your you know your uh per person reimbursement rate by doing that. And there's plenty of services that you can do. I mean, I'm a financial advisor. I mean, I can uh you guys know better than I do the the things, but I I know that there's plenty of things that you can you can do to drive that number up. See, there's so it's you can win. Absolutely.

SPEAKER_01 34:33

Yeah, it's huge, huge opportunities right now. And again, like the we have clinics that are absolutely crushing it when it comes to this stuff. They're great at marketing, they're great at selling within the clinic. Those are the I'd say those are two critical skills that you need to develop in your business right now. If you're gonna survive and thrive into the future, the better that you get at marketing your business and branding it and and capitalizing on all these markets out there, you're gonna win. The better you train your front desk and your therapists on how to sell additional services, which they never really were good at before, right? We had it cushy because a doctor would send us a referral and you know, we're just gonna treat you. But you gotta like every other profession has to sell their services.

SPEAKER_02 35:15

Yes, right.

SPEAKER_01 35:17

Um, you know, so like we just got to get better at that. It's just training, right? You just gotta train your team better and find the right people that fit that model that can sell well and communicate well with patients. Um, and selling is a good thing, right? It's not and people like think of it as bad, it's a very good thing because you're helping someone get what they want to accomplish, right? So they want to get out of pain or they want to be faster, fitter, they want to live longer, they want to have a greater quality of life. Sell them that, right? You have the you have the skills, you have these incredible services that you can offer them. I mean, just think about, I mean, we we have clients that are doing medical wellness. So all the people that are overweight, they have heart conditions, they have diabetes, just that right there. There's so many people that could be living a better life if we were part of their solution, and they will pay for that, right? Because the medical system is broken and it's not helping them get better, it's just making them sicker. So, again, we have these incredible opportunities, but again, you just have to look at that as part of your business's ability to generate revenue towards the household, right? Which again comes back to what we're talking about. Uh, Eric, just um keeping along these lines of creating a stronger business, you get what you measure. So, from a financial metric standpoint, what are some of the key things a PT owner should be tracking regularly?

SPEAKER_03 36:47

Uh, from a financial perspective, yeah. Um for well, uh look, I mean, I think certainly uh a reserve amount in the business is is a good metric of how much I should be how much I should have in reserves. I like to see people have at least two months of business reserves sitting in in a money market account of some kind. I think that's certainly a um a valuable uh uh metric that anybody can do. You know, as far as debt is concerned, you know, I uh having business debt is I'd like to see that at zero. I know it's required. This is not like real estate, but certainly, you know, I don't want to encumber too much of the cash flow towards um towards just paying things off every single month. So not having a a huge amount of uh loan overhead, I think is a is an important metric to look at. You know, how much how close are you to having the business completely debt-free? You know, if you bought a practice and you're paying it off, I understand that, but you know, just not overburdening the the practice. Um what are some other metrics that that we can look at? I think I'm mostly on the household side, we certainly look at like um tax rate, effective tax rates. How much are you keeping? That's a really, really key one uh because sometimes your financial team you know isn't being very proactive on minimizing your tax liability. Taxes can be a big expense, especially in states that have both a big state tax and you know you're in that federal income tax bracket where you know you're probably creeping up to 30, 35 percent somewhere around there. So measuring that total amount is you gotta be aware of that so that you can do some proactive things there.

SPEAKER_01 38:28

We pray for our California practices out there.

SPEAKER_03 38:32

We do we do pray for our California practices out there. We pray for California, we pray for Minnesota, we pay for New York, we pray for soon to be Virginia, I think it is right right there.

SPEAKER_02 38:43

Thank you. Yeah, I know. Yeah, we we pray for all of you.

SPEAKER_03 38:47

Uh but uh you know, those are those are I think some really, really key metrics to that that you can look at, you know, internally in the practice. I think a marketing one, I mean you tell me, you know, I'd like to see you know uh new patients coming in, and and there should be like a ratio of like the new patients you're bringing in, should like 70, I don't know, maybe it's 70 percent, seven out of ten should be new new patients, you know.

SPEAKER_01 39:12

Yeah, actually, you know, so so one thing that we try to uh really encourage uh practice owners to to look at, and and this has gotten way better over the years, but um you you want to just like smart financial decisions, you want to diversify where your income comes from. So if you have income from one source, you're always at trouble of that one source breaking or something happening, and then you're having trouble, right? Same thing with like marketing. So you want to make sure that I would say at least 50% of the people that are new people or people that are coming in for new services with your business are actually um within your customer profile, right? So that you're basically your past patients. If you get your clinic into a position where you have about 50% of them coming in for repeat services and sending a friend and family member to replace themselves, you are in an incredibly strong position there. And that's where a lot of practices can be very successful just in that alone. And there's other practices which don't do much with their patient marketing, so that that number is small and they they kind of have to keep working so hard to get new patients in the door. But 50% or more should be past patients and referrals from those patients coming in, and then getting your your where you can have direct to consumer marketing, bringing in say about 40, 35, 40 percent of your new patients coming in, and then 10, 15 from referral sources, whether that's physician groups or networks that you're part of, something like that. I think that gives you a real good diversification and where you get new patients in the door.

SPEAKER_03 40:52

Yeah. Um like that.

SPEAKER_01 40:53

And you can it's scalable that just grows your business, it grows your business, and and you can do that across, you know, it's harder when you start a new location because you're brand new. You don't have the the patient base yet to put to build upon, but you can do that relatively quickly. So you do have to invest more to get that new location up and running with new patients, but then they should start to repeat, right? And bring in friends and family.

SPEAKER_03 41:16

Yeah. And then look, I think the collection, obviously, you have to collect money and you can't be afraid to get it in the door, and you have to be dogged about it. And that's where I think a lot of people also like I mean, like uh Erica, how much should I collect? I'm like, all of it. Absolutely. You did it, right? You worked for like well, it's like 90% good. I'm like, no. Like, how about 95%? I'm like, no, like a hundred. And I know okay, it's not always realistic, but let's let's make sure, like, where our our viewpoint is no, um you're paying your co-pays, you're you're paying for the service, and we're not giving it away uh for whatever reason. And that I think that's where training your people, you know, and having that viewpoint is really, really key as well. Like, hey, your pay is tied to this too. I can't give raises, I can't, you know, do fun things for the organization if money's not coming in the door.

SPEAKER_01 42:11

Yeah, so bonus your building people, bonus your front desk.

SPEAKER_03 42:14

Yeah.

SPEAKER_01 42:15

That to for on collections and and uh you know um appointments held, things like that. I you know, I think that's a key thing for for for for any business is to really bonus your staff uh on performance, right? But especially, I know a lot of practices don't do that, they're just kind of straight salary, but think about it, like even for those key positions that on collections, right? So front desk is on collections a lot. Sometimes you have a billing person that's helping out with collections, but they don't, you know, it doesn't have to be a big bonus, but it could be enough. Just what what's the incentive there for them to perform better? And and gosh, if you go from 90% collections to 95% collections, that's and you paid a hundred bucks extra, you know, uh a month or a week, whatever you want to give them. That's that's you know, that's money that was never gonna be collected before, but now you got it.

SPEAKER_03 43:04

Yeah. The biggest expense you have is money that you should have made and you didn't. And that is a another fact. Yeah. That a lot of people kind of forget.

SPEAKER_01 43:15

Let's talk about that for a second, because that's something that I learned from you um also a long time ago. And that's um say that say that sentence again for me, because it was it's huge.

SPEAKER_03 43:27

So the big so the most people when I ask them their biggest expense, they're oh that's easy. My payroll is my biggest expense. It's 70% and you know, or whatever, uh, you know, overhead. Or I'm like, well, uh, you know, in all actuality, you know, you can make an argument that the biggest expense you have is money that you should have made and you didn't. Okay. So uh, you know, all of most of you own uh have a facility that has a certain amount of square footage, and you can see so many people. You have so many slots. However, you decide that you want to do that, right? You have so many slots in a day. What is your capacity level right now compared to where it should be for it to be at pretty close to full? Okay. And the difference between where you're at right now and what it should be at at near full capacity is an expense because that's money that for whatever reason, bad marketing, not hiring enough people, not being able to keep enough people, bad onboarding, um, losing people all the time, whatever. Okay. That that sweet spot right there, you know, is the difference between people that are um flourishing in their household, have you know retirement set, are paying off debt faster, have nicer cars and homes and all these things, is that that sweet spot right there. So fix that. Yeah. Okay. And and and once you do, uh great. Your life just gets infinitely better. But it is a big expense. You know, if I have a practice that should be doing $150,000 in revenue a month or has the potential to do that, and I'm doing $75,000 or $100, you know, that's a $50,000 loss. Now it doesn't, you can't write it off at the end of the year, but it's a loss.

SPEAKER_01 45:22

Yeah.

SPEAKER_03 45:23

So just think with that. Yeah. And I think once once you do, you'll you'll try to fix it as fast as you can.

SPEAKER_01 45:29

Yeah, and I love it because it's a totally different way of looking at things, right? Because and we encounter this all the time when trying to help someone understand like the benefits of of investing in their marketing, right? Because have you really calculated out what your whole practice space should be making, right? Because a lot of times they'll be like, hey, I've got a 3,000 square foot facility. I've like, I got four providers in it. Okay, well, if you had more providers and you're completely full, like what could the facility produce, right? And they're, oh, well, yeah, but my therapist can be busy with what they have. Like, well, couldn't you hire three more therapists and fill that space? Yeah, yeah, I could do that. Well, so that's that's revenue that you could be making if you had everything working towards it, but you're not, right? And so that that's that's a key thing, too. So um here's a here's a number for our audience that can be very helpful, and that is just it's it's just a roundabout number, it just gives you an idea. It can depend on your model of how your practice operates, what how efficient you are. But typically around a hundred patient visits um per week per thousand square feet. So if you have a 2,000 square foot facility, you should be making over 200 patient visits per week. And let's just say you have two therapists in there, maybe they're doing 100 patient visits, but you could probably get another, you know, two therapists in that to get you up to that 200 patient visits, you know, per week that are needed in that space. So I think that's a great way to look at the potential for your practice, your business, and where you need to be going towards. And that helps you make better decisions again, like, oh, I need to increase my marketing so that I can drive more new patients in, or I can attract more therapists here, and then I can maximize my space. I can maximize the efficiency, the labor ratios within this space, and then that's gets me closer to that earning potential.

SPEAKER_03 47:26

Yeah, it will help all your ratios when you do that. It really will. It'll it'll everything will balance out as it should, you know, once you get to that number.

SPEAKER_01 47:36

Yeah. Um, one other thought here that I again I I learned from an accountant. Um, he wrote a great book called Simple Numbers, uh, Greg Rabtree. And uh it's your labor efficiency ratio. And he did a a lot of stuff is calculated off sometimes bigger corporations and how they operate, which is very different than a small business runs, right? And so he actually did a lot of study over hundreds of small businesses, and what are some of the key factors that make those businesses highly profitable? And the key one, especially for us in physical therapy, is that we we're very heavy on high uh professional labor, right? And then the support of that high professional labor in there. So your labor efficiency ratio is a key metric for you to understand, the the higher that labor efficiency ratio is towards the number two, and there's there's formulas and how to do it in his book and everything, but the higher you are to the number two, uh, the more profitable you're basically gonna be. And so when a business gets very low on their labor efficiency ratio, getting down to like 1.5 or lower, that's when they really are struggling financially. So that's a key thing for you to be looking at is your labor efficiency ratio uh in your practice. So great book, simple numbers.

SPEAKER_03 48:59

Very cool.

SPEAKER_01 49:00

Yeah. Um, so kind of wrapping up and tying things together here, uh, Eric. So just kind of what are some key things that a a practice owner needs to be looking at here over the next 12 months? Where where could they basically start?

SPEAKER_03 49:15

Yeah, let's um you know, I think the first thing to do is just get a hold of uh all of your numbers. And what I mean by that is just can try to try to just make sure that you bring some semblance of order to your finances. And that just means that from a household perspective, you know, if you haven't like done a net worth statement in a while, like do one. You know, like let's look and see where you're at. Like how much do you have in assets, how much do you have in liabilities, what does that look like? Okay, and at least it gives you a grasp of um where I stand financially for sure. I think on the practice side, you know, I would I would do the same thing. You know, we went over some metrics today, and you know, let's let's take a look at you know, maybe that uh uh that employee ratio. Where where are we? I mean, how much of our money is going towards things that are that are going to produce more value for the business? And really, really, you know, really, really get granular on that. Like like I said this before, you got to give every dollar a job when it comes in. And make sure that that that dollar is going to create something more valuable for your practice and that it's going to good use. And just be really, you know, be mindful of that. And don't be so carefree of of money, you know. And I don't want you to like sit there and nitpick every single expense that you have, because uh you cannot expense your way into prosperity at all. You just can't. You can try, but you can't do it. Um, but you do have to be mindful of things that are creating an enormous amount of value for yourself, both on a household level and at the business level as well.

SPEAKER_01 50:57

Awesome. Great advice there, Eric. And so I know you have um tons of free training and other trainings, right, to help practice owners uh with their financial condition. So, what's some of the best ways for a practice owner to get some of your training?

SPEAKER_03 51:13

Well, they can certainly go to our website, Ecologics Financial Advisors. And we have, I mean, I just wrote a book called Household First. Uh, you can certainly go to, and I think it's on Amazon right now. I'm assuming it's on Amazon right now. If it's not, I got a big problem. Uh and you can get a you get you can get a copy of this. We this one is for veterinary practice owners, but we have one for physical therapists as well. So uh that would be uh a great way to do it. And then we do a podcast called the Financial Beast Podcast, which of course you'll be on, I think, next week. And then we do, you know, we'll do webinars and you know, we go to conferences, we're going to TherapyCon in a few weeks, and of course we'll be at PPS. So we're in the we're in the industry, we know the industry, and you know, uh we love PTs. You know, you guys make people's people free of pain. Yeah. So we're trying to free your financial pain.

SPEAKER_01 52:06

I love it. Yeah, we love PTs too. Uh definitely check out econologics, financial uh advisors.com. That's where you get a ton of the free training on there. Like I said, follow Eric on his podcast there. Um get his book. All that stuff is free. Great stuff. Uh, you don't have to work with Eric, but I highly encourage you to take a look at them because they've they've helped us tremendously in our business and in our household, too. So super um, super powerful group there to get to know and definitely have some awesome training. So thanks, Eric, for being on the podcast. Much appreciated. Thanks, buddy. Always great to have you on here and get your advice uh to our audience out there. I hope you got a lot out of today's podcast. Don't forget to like and subscribe to our podcast, as well as our YouTube channel where you get all these videos of our podcasts as well as free advice. And of course, on practicepromotions.net, we get tons of free marketing advice for your practice. So, this is Neil Trigott from the Practice Marketing Podcast, wishing you much success in your practice.

SPEAKER_00 53:09

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