Introduction to Business and Practice Management for Rehabilitation Professionals

Original Editor - Jacquie Kieck

Top Contributors - Wanda van Niekerk, Jess Bell and Jacquie Kieck  

Introduction

Creating a thriving rehabilitation business extends beyond clinical expertise - business owners need to develop a combination of clinical and business management skills, as well as knowledge of healthcare economics. However, while there's a growing need for business skills among rehabilitation professionals, many clinicians have insufficient knowledge of business management when they start their own practice. To successfully transition from clinician to business owner, most clinicians will need to develop additional business and practice management skills that complement their clinical expertise.

Financial Planning

There are financial risks associated with starting a business and there might be unexpected financial challenges. Careful research and planning are necessary before starting as "insufficient research could lead to unnecessary expenditures."

Financial planning can be a daunting task for a clinician. However, with proper support from a team of experts and sufficient business knowledge acquired through training, it can become more manageable. It might be helpful to determine what you don't know and seek advice and support in those areas.

Budget

A good place to start is drawing up a budget. You can work with two budgets - i.e. a capital or start-up budget, and an annual budget or a budget of your running costs.

The capital budget will cover the major items that need to be funded to set up your business. These are usually things such as the premises, equipment (medical and non-medical) and potential vehicle(s).

The annual budget will cover the ‘running costs’ of your business. This can include consumables, subscriptions, and utilities (e.g., internet/wifi, phone, etc.).

It is important to recognise that a new business will not generate an income immediately, so some capital will be necessary to initially cover the running costs of the business. Consider how the capital costs will be funded. For example, funding may be through a loan, savings or cash, a finance company or applications for funding from donors or investors.

Always consult with a relevant advisor when considering how to secure funding.

Premises

Purchasing a Premises

There are various considerations when purchasing premises for your business. For instance, you must consider your funding sources. Establish where funding will come from if you are buying premises for your business (e.g., a bank loan, savings / cash or a finance company). In the case of a loan, it may be worth consulting a mortgage broker for guidance, but you will need to familiarise yourself with the lending rates, fixed and variable interest rates, etc.

Does the premise require any renovations or accessibility upgrades? You will need to consider potential expenses related to the premises. Questions to ask include: does it require renovations? Do the parking facilities need an upgrade? Does accessibility to the premises need to be improved?

If renovations and upgrades are necessary, where will the funding come from? Should you consider getting a higher loan (i.e. more than the purchase price) in order to make the premises appropriate for your purpose?

You will also need to consider if there are any registration and zoning requirements. Consider the property's current registration with the local council / municipality. You will need to establish if the property can be used for the purposes that you intend. For instance, if it is registered as a residential property, do you need to apply for the right to operate a business from the property? You do not want to buy a property only to discover that you can't operate your business from that location!

You should familiarise yourself with the requirements of the registration type that you are applying for, the timeframe for gaining this registration, the costs involved and specific council rules around parking. For example, if your rehabilitation practice is classified as a doctor's ‘surgery’, you may need a certain number of parking spaces per treatment room. You will need to refer to your town planning and/or council guidelines to learn more about these requirements. Engaging a property lawyer or solicitor can help ensure that you address all property registration requirements.

You should also consider parking and accessibility issues. Your premises must be accessible to your clientele. Remember, you will have established your clinic profile as part of your business plan, so you should have a good idea of the accessibility needs of your clientele. You will also have considered the legalities around operating a rehabilitation clinic at your chosen premises, so you'll understand the accessibility requirements for businesses like yours. Assess for steps, wheelchair ramps, doorway width (e.g., for wheelchair accessibility) and consider if the toilet facilities are appropriate for your clientele. You should also check for safety hazards, such as uneven ground, changing surfaces, and if there are any covered areas for access when it is raining, etc. Don’t make a financial commitment to any premises until you have established that it is accessible for your clients and meets the legal requirements for your business

Renting a Premises

There are also a number of considerations when renting a premises. Find out if there are any up-front capital costs, such as a deposit or a requirement to pay rent up-front. If you are renting a space within a building, or for example, a room in a general practitioner (GP) surgery, consider the same accessibility aspects mentioned above.

You'll need to check if there are any shared areas, such as a shared reception space. It's important to find out what your regulatory body requirements are around sharing an office space with other practitioners. In some countries, a healthcare practitioner may only share a space with a practitioner who is registered with the same regulatory body (i.e., an occupational therapist may only share a space with an occupational therapist).

You should find out what input you will have in the layout of the building. If you are moved to a different room in your rented premises, you will need to check if your clients can still access your allocated treatment area safely. You will also need to check that your clients can access the toilet facilities safely.

There are important security considerations as well. If you are renting a room in, for example, a GP practice, find out who the owner of the building is. Is it the GP or an external landlord? You will need to understand who you hold the rental agreement with, and if the owner of the building changes, what rights you have.

There can be various additional costs associated with rented premises. Find out if you are responsible for water, electricity and wifi or if these are included in your rent. If these services are included in the rental fee, consider if the service provided is sufficient for your business needs. For example, if wifi is provided, is it fast enough to service the systems that you need to operate?

Location and Competition

It is important to research the rental rates and property prices in the vicinity. Consider the location in relation to the clientele that your business will serve. For instance, are the rooms situated in a hospital building, in a shopping centre or in a gym? You should establish what competition is in the area and what services are available. If there are hospitals, care homes, sports facilities or schools, could these be potential referral sources?

These considerations can form part of your business SWOT (Strengths, Weaknesses, Opportunities, Strength) analysis.

Remember that your premises should reflect your professional image.

Home Visits

If you offer home visits, you may need to consider a vehicle for transportation. Assess whether this is financially viable considering the depreciation cost of the vehicle. Also, review your billing structure to determine if you can charge for travel and at what rate. Some funders may allow billing only after a certain number of kilometres, while others may cover travel from the first kilometre.

Equipment

Equipment is a capital outlay cost that you need to budget for. You will need to establish if you have the funding to cover setup costs related to equipment or if you will need to take out a loan to fund the cost of purchasing equipment.

It's important to establish what equipment you will need. What medical equipment is essential to run your clinic? Do you require certain machinery to be able to provide your service? What non-medical equipment do you need? Non-medical equipment might include computers, reception furniture, consumables, clothing and uniforms.

You'll also need to make sure that there is adequate space to house all your equipment safely.

Your budget will help you estimate the funds needed to cover the start-up and initial running costs of your business. From there, you can plan how to secure these funds. Get the appropriate advice from the lender (bank or otherwise) and consult an accountant for help in setting up your budget.

Marketing for a Healthcare Business

In healthcare marketing, rehabilitation professionals are promoting services rather than physical products. This is unique in that the clients cannot ‘see’ the ‘product’ before buying it. The personal aspect becomes very important here, and developing trust in the person/persons delivering the service is paramount.

Some core marketing principles still apply when it comes to understanding your target audience, defining your brand, and utilising effective strategies to reach potential clients. Watson et al. interviewed physiotherapists who established their businesses and reported that most felt unprepared to address marketing strategies when they started. The participants felt that word-of-mouth and websites played a key role in their marketing.

Marketing Regulations

Familiarise yourself with the marketing rules and regulations that govern your professional marketing. Healthcare professionals in some countries may be subject to marketing restrictions by their regulatory body. For example, in some countries, you can't choose any name for a clinic (e.g. "Physiopedia Rehabilitation Centre"). Instead, you must use your name in the clinic name (e.g. "Joe Bloggs Physiotherapy"). Many regulatory boards provide professional guidelines for advertising in various media, such as print or radio, and have specific signage regulations. Check with your regulatory board for exact regulations.

Know your Target Audience

When designing a marketing strategy, it is essential to consider your clientele and referral sources. Where do your referrals come from? For instance, are they mostly word of mouth, or from other professionals? Alternatively, do you hold certain contracts that generate most of your referrals from a specific or single source?

You should reflect on the needs and motivations of your target audience. Is the client or patient seeking your services directly, or is someone searching on their behalf (e.g., for paediatric or geriatric clients)?

It can be very helpful to develop strategies to strengthen relationships with referral sources, particularly if your client base relies heavily on referrals. You will want to build meaningful relationships with your referral sources by establishing trust and removing barriers to referral. To do this, it is important to understand the person behind the referrals and to be intentional in fostering relationships with referrers.

It is good practice to send a discharge letter for all referred patients. This not only informs the referrer of the patient's outcomes but also educates them on the range of interventions and services you provide (e.g., a GP may not know that a physiotherapist can provide hydrotherapy or pelvic health physiotherapy).

Marketing Strategy

When developing a marketing strategy, you will want to align your strategy with your objectives and target audience. Make sure that you highlight the services you provide, your location and expertise.

As part of your marketing strategy, you will want to ensure a seamless client journey from initial contact to discharge and that you create a comfortable and appealing physical environment for clients.

Social media can be an excellent way to reinforce your brand identity if its use is permitted in the marketing regulations of your regulatory board. It can be useful to invest in a professional website with search engine optimisation (SEO) for better visibility. If you are unfamiliar with marketing, you might want to consider hiring a marketing advisor.

Business Structure

A business structure is the legal entity under which a business will operate. The type of entity chosen will impact taxation and legal responsibilities. Careful consideration of this choice is important as it will affect agreements between stakeholders in the business.

Some common business structures are summarised below.

Sole Trader / Solo Practice / Sole Practitioner

In this model, there is no legal distinction between the individual and the business - the individual is the business. This means the business is not a separate legal entity and the individual is personally liable for all aspects of the business, including debts or legal issues.

Partnership

This model involves two or more individuals sharing resources, profits and losses, as per the partnership agreement. The business itself does not pay income tax; profits are distributed to the partners, who then pay personal income tax. Partners also share personal responsibility for any business liabilities.

A partnership agreement should be drawn up with legal guidance. This agreement will need to cover key details such as:

• contributions of each partner (capital, intellectual property, client lists, premises, etc.)
• income distribution methods
• daily responsibilities of each partner
• dispute resolution procedures
• what happens if a partner leaves or dies
• steps to take if selling the business

Company

A company is legally separate from its owners, offering limited liability protection. This means that the personal assets of the owners are generally not at risk. However, setting up and running a company can be complex, and it is important to obtain legal and financial advice to determine the best structure for a business.

Financial and Tax Considerations

Each business structure has its own financial and tax implications. It's important to explore these implications with a relevant professional (e.g., an accountant). Key areas to consider include your tax obligations. You need to understand when taxes are due, how much will be owed and where you can get guidance. A business owner is responsible for managing and paying taxes, unlike an employee, where taxes are typically deducted automatically (e.g., PAYE - pay as you earn).

In some countries, government agencies offer tax guidance and support. Make use of these free resources before paying for support from private entities.

Tax Brackets and Value Added Tax (VAT)

It is important to get advice on tax brackets and tax codes that apply to the business, including income thresholds for various tax obligations. Some countries may also impose VAT (Value Added Tax), and it is necessary to know whether your business qualifies as a VAT vendor. This will determine if VAT costs can be passed onto clients or whether the business will need to absorb these expenses. Balancing these tax responsibilities with the billing rules that govern the profession is essential for financial planning.