Physical Therapy

How to Set Up A Physical Therapy Business Model

Physical therapy clinic with a diverse team of professionals discussing business models and strategies for success.
Physical therapy is constantly evolving. Here are 7 physical therapy business models to consider for your PT clinic.

From telehealth to traveling providers, people want more options when it comes to their healthcare providers. Even before the COVID-19 pandemic, research found that consumers across all generations are more willing to try nontraditional healthcare services.

To remain competitive in an era of changing consumer expectations, your physical therapy practice needs to adapt. Finding the right physical therapy business model for your clinic is the first step. 

Your clinic’s business model depends on your goals, along with your team’s specialties and the needs of your patient base. For some PTs, this means partnering with companies to provide physical therapy on site, while others will transition to a cash-based model. 

Here’s what you should know about the leading physical therapy business models, including their pros and cons.

1. In-network insurance

The in-network insurance model is the most common physical therapy business model. Insurance benefits make it easier for patients to pay for treatment, which makes them more likely to visit your practice.


  • More referrals: Referral sources like physicians are usually reluctant to refer their patients to an out-of-network provider because of the associated costs. Also, patients often use their insurance provider’s directory to find in-network PTs.
  • More accessible care for patients: People who can’t afford the entire cost of PT services can still get treatment.


  • Low reimbursement rates that continue to decline: This year, the Centers for Medicare & Medicaid Services announced a 15% payment reduction for services that are partially or entirely provided by physical therapy assistants and occupational therapy assistants.
  • Limited treatment options: Insurance providers restrict the number of PT sessions a clinic can provide to a patient or limit the treatment in other ways.
  • Increases the risk of burnout: To be profitable, many in-network PT clinics must treat as many patients as possible in one day, which can lead to burnout.
  • Impact on quality of care: When PTs must juggle multiple patients at once, this impacts the quality of treatment and the patient’s recovery.

2. Out-of-network practice

Out-of-network practices do not belong to an insurance company’s network. Your clinic must either bill the patient when services are provided or bill the patient’s insurance company directly. 

Many insurance companies have a limit on out-of-network coverage (and some plans don’t cover them at all), so it’s up to the patient to cover the costs.

PT clinics that opt for an out-of-network model do so because low reimbursement rates aren’t financially viable, and they don’t want their patients’ treatment to be restricted by insurance providers.


  • Not subject to rules and regulations from insurance companies: In an out-of-network model, PTs do not need to adjust their practice to follow the guidelines of the insurance company. 
  • More autonomy over treatment options: Insurance companies can impose restrictions, such as the number of PT visits they will cover per patient. Without an insurance provider in the picture, the PT and the patient have full control over the treatment. 
  • Freedom to deliver better treatment: Without insurance restrictions, out-of-network practices can focus on delivering the best possible treatment to the patient.


  • Higher marketing costs: Out-of-network PT clinics might need to invest more in marketing to convince patients that they’re a better option than an in-network provider.
  • Fewer referrals: Physicians are more likely to refer patients to in-network PTs, so out-of-network clinics will need to put more effort into persuading physicians to refer patients to their practice.

3. Cash-based practice

A cash-based physical therapy business model is similar to the out-of-network model since neither is limited by insurance providers. Unlike out-of-network clinics, cash-based clinics don’t request payments from insurance providers since the patient covers the full cost.

Cash-based PT care is on the rise. In 2021, 45.5% of clinic leaders said they were planning on adding or increasing cash-based services.


  • Higher quality of care: In a cash-based practice, PTs have the freedom to work one-on-one with the patient until they make a full recovery.
  • Low overhead: PTs that work with insurance providers spend a lot of time on paperwork. In a cash-based practice, this is not needed.
  • Reduces the risk of burnout: Some insurance providers require PTs to treat a minimum of three patients per hour, which puts pressure on PTs to meet that number and leads to stress. Cash-based business models mitigate this risk.


  • Not ideal for Medicare patients: Cash-based PT clinics may only accept cash payments from Medicare patients if Medicare doesn’t cover the treatment because of statutory exclusion or if it isn’t medically necessary.
  • Higher marketing costs: Like out-of-network PT clinics, cash-based practices also need to persuade patients they are the superior solution.

Limited to a certain demographic: Cash-based physical therapy is usually too expensive for lower-income individuals. Clinics should carefully consider their location and whether the local community can afford their services.

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4. Interdisciplinary care

Rehabilitation is not a simple process: PTs often collaborate with other rehab professionals, like occupational therapists (OTs) and speech-language pathologists (SLPs), to help patients meet their goals.

In an interdisciplinary team, professionals from different disciplines collaborate at a high level based on a shared strategy and deliver the treatment in a single session. This is different from multidisciplinary care, where a patient would meet with different medical professionals separately.

Interdisciplinary teams have been shown to improve functional outcomes and survival, particularly for stroke patients. Researchers have also found benefits when treating traumatic brain injuries, mental health issues, and chronic pain, among many other conditions.


  • More holistic approach to patient care: Professionals from different disciplines can tackle the same health issue with several approaches.
  • Enables a more efficient referral process: Instead of getting referred to multiple specialists, patients are referred to a single team.
  • Improved internal accountability: Working as a team requires careful analysis of errors, which increases accountability.


  • Tough to coordinate: Building a team in this model isn’t always straightforward, and can take time, because you need to build relationships with the right people.
  • Time-consuming: It can be difficult to find enough time to attend and participate in frequent team meetings.

5. Health and wellness partnership

You can attract more patients to your practice by entering into a mutually beneficial relationship with other healthcare providers and health-oriented businesses.

Possible partners include:

  • Physicians 
  • Chiropractors 
  • Massage therapists
  • Gyms and fitness clubs
  • Yoga and Pilates studios
  • Sporting equipment stores
  • Assisted living facilities

By teaming up with other professionals, you can grow your practice while focusing on your specialty.


  • Growth: It’s easier to expand your business as you’re covering a variety of patient needs.
  • Mutual referrals: When working with different healthcare and wellness providers, it’s easier to get referrals.
  • More patient data: A partnership with other healthcare and wellness providers means being able to share data for more informed treatments. Additional patient data also allows you to make better marketing decisions.


  • Legal liability: As a PT, you may be expected to provide care in emergency situations (such as a heart attack) or identify early risk factors for health issues, even if you are providing non-physical therapy services. Failing to do so might result in legal issues.

6. Workplace-based physical therapy

The workplace-based physical therapy business model involves PTs partnering with companies. This type of on-site physical therapy can prevent and treat job-related injuries.

Workplace physical therapy includes services like:

You can also add corporate physical therapy to your clinic’s offering by contracting with a company to offer discounts or full reimbursements for their employees' visits to your clinic.


  • Cuts costs: When you’re an on-site PT, there are fewer business costs such as rent and utilities for your own clinic space.
  • Improved treatment: By visiting a patient’s work environment, the PT can better understand what’s causing the patient’s issues.


  • Potentially limited business growth: Workplace-based physical therapy is most affordable to large companies with bigger budgets. This could limit your business growth depending on your location and whether you have access to such clients.

7. Concierge services

In a concierge physical therapy business model, PTs usually offer their services on a subscription basis or as part of package deals that treat specific ailments, such as an ACL injury. A subscription model can be especially beneficial for patients with recurring symptoms, as it allows them to see the PT as much as they need.


  • Predictable income: A subscription model allows you to generate steady revenue and ensure profitability. 
  • Better patient relationships: Patients who pay a subscription fee can schedule an appointment whenever the need arises without having to wait on a referral. As a result, you can get to know your patient better and build a long-term relationship.
  • Pairs well with mobile physical therapy: To make your concierge services more appealing to patients, you can also offer home visits.


  • Additional costs are possible: Although a subscription or package fee covers the cost of the patient’s treatment, there may be instances when you would have to charge extra for additional services. In this case, transparency with patients is key.
  • Limited usage for Medicare patients: As is the case with other cash-based clinics, Medicare patients have limitations in using concierge services.
  • May lead to patient dependence: Some patients might become overly reliant on frequent PT visits instead of becoming more independent and confident in their mobility.

Try a nontraditional physical therapy business model to keep up with a changing industry

The healthcare industry is rapidly changing, and technology is at the forefront of this evolution. Last year, 74% of healthcare executives said they were highly likely to invest in patient access technologies such as telehealth.

With a greater focus on making healthcare delivery more accessible to patients, you might need to adjust your physical therapy business model. Innovative solutions like Exer Health and Exer Gait can help you do that using artificial intelligence. Both apps allow you to offer personalized patient treatment that improves outcomes, whether it’s at home or in the clinic.

No extra hardware, no sensors.

Exer software runs on mobile devices that patients and healthcare providers already own.

It's finally possible to drive business and patient outcomes with verifiable motion health insights that don't require up-front hardware costs or invasive, clunky sensors.