Dr. Dimitrios Kostopoulos passion for physical therapy is obvious, and his vision is unique and outside-the-box. He has a number of PT businesses and is successful in each one of them, thus he has a unique perspective on the state of physical therapy and the issues negatively impacting PT clinic owners and the profession today. However, he also has the answers to the three issues he presents. Following thru on each of those items will put you on a path to freedom, but if you don’t take the time to study, implement, and do the administrative footwork necessary to run your business, you won’t make it. Dr. Kostopoulos shares that that knowledge on the subject provides a greater responsibility in the area that you are learning something about, and knowledge, responsibility, and control always go together.
Listen to the podcast here:
The Three Issues Negatively Impacting PT Clinic Owners And How To Address Them with Dr. Dimitrios Kostopoulos
Dimi, thank you so much for taking the time to be on my podcast. I was excited to bring you on as a guest simply because over the time that I’ve known you, you have so many things going on in your life business-wise. I figured I need to talk to this guy and see how he gets things done. How is he so effective and productive? Dimi not only owns and practices in his own physical therapy clinics in New York, he also owns the HODS company, Hands On Diagnostic Services, where he not only provides electro-diagnostic services for physicians but also trains physical therapists in electro-diagnostics. He does a significant amount of work in the APTA. He has a professorship, am I right, Dimi?
Yes, at the SAU school of medicine.
On top of that, he’s doing research and he’s at all the APTA events. The man is busy, the man is productive, and he’s definitely successful. I’m anxious to bring you on, Dimi. You’ve been a great influence in my life and honestly one of the reasons why I’m in Alaska. For the audience, would you share your story what got you into PT, what got you into physical therapy ownership, and to the point where you are now?
First of all, Nathan, let me just say, what an amazing work you are doing with this podcast and what a gift you are with this podcast to the physical therapy profession, especially private practice physical therapy.
Thank you. Keep going.
We can start talking about each other accolades here and the feeling good, but the bottom line is let’s get into something that people can be helped and we can give them some information and some advice that they can find useful right now in what they are doing in their private practices. You asked me why I got into physical therapy. I did not. They just put me into physical therapy. I was born, grew up, and went to school in Greece. The educational system in Europe is a little different than in the United States. What you do there is you choose an area of interest which can be either generally the medical sciences or generally the sciences of physics and math and all that, or then philosophy. Depending on the area that you are choosing, you take special exams and they just put you based on the score you got into a specific area. Physical therapy was not my first choice by the way. It was actually my second choice. Medicine was my first choice. Physical therapy was my second choice, but I did not score that high so they put me in physical therapy. I took it as it went.
I finished physical therapy and during the time I was starting it, it was awesome and I fell in love with the subject after I was exposed to it, not before. When I finished my studies in Greece, I came to the United States to do graduate studies. I worked for a couple of years in hospitals, but then in 1992, I decided to open my own private practice and this private practice very quickly, in a few years, grew to multiple practices. My business partner, Kostas, and myself from 1992 to about 1997, 1998 ended up creating and developing thirteen physical therapy practices doing 2,400 to 3,000 visits weekly. We were the second largest physical therapist owned private practice in the New York state.
Was that difficult to ramping up, the sheer magnitude of that? How were you able to maintain it?
From 1992 that we started the practice until 1995, the first two and a half, three years, we went just from one office to two and a half offices. In the middle of 1995, beginning of 1996, we’ve got involved with a consulting firm called Survival Strategies. From Survival Strategies, we’ve got very intense instruction, courses, and programs that helped us develop the practice. From the end of 1995, we literally started opening a new office every couple of months. Towards the end of 1998, we had thirteen physical therapy locations.
Why did you decide to reach out to the consulting firm? My target audience is the independent patient practitioner who has his own clinic and there, of course, are other physical therapists who are more established, but they might be in that boat where they’re considering consulting or they haven’t reached out yet. They don’t know who to reach out to. What led you to reach out to the group Survival Strategies? Was there a turning point or something that made you think, “I need to do this?”
It got to a point that I was so confused because I had zero knowledge in how to manage a business. I did not know management. I did not know how to manage finances. I had no idea how to market. I was going out there to meet a physician and I was going with an attitude, “I’m Mackenzie-certified and I’m Maitland-certified, and I’m this and I’m that.” Who cared what certification I had. It was not effective.
You noticed that you were losing control in your business or did you have a particular incident that sets you off?
I started not sleeping at night. Seriously, I was very stressed out because I did not know how to handle things. I was feeling, “How am I going to handle my payroll? Why I did not save money last month? I did not think that I will have more expenses this month.” I was not thinking in an organizational way. I was not planning properly. This is finally what changed. There were a lot of things that changed when we sought help from a consulting firm, both in the management area of the practice and also in the way we approach the community. The way we approach the referral sources changed tremendously too and made a huge difference.
After gaining some organization going through the consulting, there was a quick change and effect that led to continued growth in your physical therapy practices at the same time. Did that include the continuing education part of your company?
Yes. We started in 1994 the continued education company and we started offering courses in manual therapy since 1994. That’s hands on seminars at www.HandsOnSeminars.com. Here is the thing I wanted to mention, that knowledge on the subject provides a greater responsibility in the area that you are learning something about. Therefore, you can control that better. Knowledge, responsibility, and control go together. You acquire knowledge about something, now you take more responsibility because you have more knowledge about that area, let’s say the private practice physical therapy area, and therefore you can control that area better. There is another equation which is magical, control equals income. The greater the control you have in a business, the greater the income you can get from that business.
I can totally see that as we’re talking about it, considering you’re not alone. A majority of us, 99% of us physical therapist that own our clinics, don’t have the business knowledge. We all have these same characteristics where we become very good practitioners and some of the better practitioners in our professions, yet we don’t have the business knowledge. That’s what leads to the confusion that you experienced, to staying up at night, the disorganization in our lives both professionally and turns out to affect us personally. As we gain that business knowledge, and we have to do that, we have to set aside the time to educate ourselves whether it’s through a consultant or some other means, some resource, whatever that might be, to learn about business. As we do so then, we organize our lives, we become more responsible, and we have more control. Thus, we gain more power and we gain greater income.
I’ll give you some data about the income aspect that we’re talking about here. A few years ago when we established a hands on diagnostics, the national franchise that helps physical therapist developed diagnostic testing services within their facilities, we paid an independent survey firm over $50,000 to do a survey to physical therapists around the country. The number one issue that private practice owners have is reimbursement. Here is what happened in regards to reimbursement to me. We developed all these clinics, we had a beautiful run for several years, and in 2004 in New York state we started receiving a series of letters from the insurance companies where they were decreasing their reimbursement rates by more than 50%. Imagine that in November of 2003, you are receiving from Blue Cross Blue Shield $140 a session and then you are receiving a letter that effective January 1st, your reimbursement will be a flat rate of $55 a session, take it or leave it. That’s painful, isn’t it? Then Aetna follows and United Healthcare follows and the other insurance follows. 90% of insurance companies in New York State end up slashing their rates by 50% to 60% at least, so we had to do something about it.
That was probably another time in your life where you were staying up late at night, I assume.
Totally because although we were holding in our hands the golden goose or the golden egg, we could not see it. We did see it finally looking more carefully on our financials and our statistics.
You were on top of your financials and your collections. You’ve got the letters but then you started seeing the cold hard numbers and you thought, “I’ve got to do something different.”
At that point, this was a pretty large organization. Sometimes making changes in a large organization, changes take place but it might be a little slower until the changes go all the way down to the line of command when you have under you 150 employees to manage. What happened though, Nathan, is we realized that although reimbursement for physical therapy services were cut so deeply and we were hardly making any money from physical therapy services, the diagnostic services that we were providing at that time, predominantly electromyography nerve conduction studies, were yielding for us at least ten, fifteen times more than a physical therapy session.
You were doing the EMG nerve conduction studies prior to this?
Yes, since the late 1990s. Once we realized that, it totally changed our entire business model. It totally changed our focus. We started dedicating time and energy and effort in identifying how we can properly incorporate a variety of diagnostic services within our physical therapy practice. Fast forward in 2018, right now we have only one single physical therapy practice. The rest we have sold and we cashed out to our clinical directors. We did not sell out to a company, we sold out to the clinical directors. When you sell out to one individual, one company’s much easier for one person who is working within the practice itself to actually make money from it. At this point, we only have one physical therapy practice which is doing very well, but despite the fact that it has high numbers, it’s reimbursement is very crappy. The reimbursement for physical therapy in New York state is still $65, $70. You’re not making money from it. At the same time though, my business partner and I have a local diagnostic company where we have eight full-time staff members exclusively doing diagnostic testing. This is where the major income comes for us right now.
[Tweet “The number one issue that private practice owners have is reimbursement.”]
That’s amazing that you’re willing to make that pivot. Considering who we’re talking to, the independent practitioner, it would be really hard for you to make that pivot if you were in the situation, like a lot of physical therapy clinic owners, if you were treating full-time. There’s no way you could have made those administrative decisions, those business decisions, if you were focused on patient treatment all of the time, I’m assuming.
Private practice owners do not value enough themselves and their time. A demonstration of that is the fact that they are spending all of their time doing treatments instead of doing any management. A private practice owner with a single PT practice who wants to expand and grow their practice must dedicate a minimum of two days a week exclusively on managing that practice. That is the only way that that person can grow the practice. If they just want to stay the way they are and just working as a PT in that clinic, then they don’t have to do that. Somebody who wants to expand must spend a minimum of two days a week in business management. As you grow that time, they expand too.
That’s my audience. Those are the people that we’re talking to. They’re the ones that are looking to grow. If they want to stick around and just keep their one-practice clinic, that’s fine, but they can always do it better. I’m targeting those that are looking to grow. Considering what you’ve gone through then over the past ten, fifteen years, what is your vision then for the future of physical therapy ownership? What do you see on the horizon? What positive and negative things do you see coming down the pipe?
The three top problems that physical therapists face right now are number one, reimbursement, number two, staffing and maintaining staff and number three, competition either from other physical therapy practices or competition from physician-owned physical therapy practices and from hospitals. These are the three major issues that PTs are facing in general. As a profession, when it pertains especially to a physical therapy, the single most important issue we are going to face is reimbursement or reduced reimbursement for physical therapy. Here is why I’m saying that. This is not an arbitrary thing or just a perception thing. There is data to back it up. What happened in January of 2007, Medicare changed how they pay for the initial evaluations. Now you have a three-tier code for initial evaluations instead of a single code, depending on the complexity of the problem.
They didn’t change the reimbursement for each one of these codes. They pay the same. Why do they want to see that complexity? I believe very strongly that we are driven into a system of paid per visit, regardless of what you do. A flat rate per visit for Medicare regardless of what procedures you do based on the complexity of care, which means that if you’re in your initial evaluation, you select a mild complexity, no matter what you do to that patient in the future, you are going to receive an x amount of money, let’s say $50 for a sprain. No matter what you do to that patient, there is a moderate complexity or a severe complexity at different rates. I am suspecting that the most important issue and challenge we’re going to face is that reimbursement issue as a profession. There is a solution and the solution is to expand as a profession our repertoire of services to patients.
Those physical therapists who are not looking at 2018 but they are looking at 2020 and beyond should be looking at other avenues and other things that they can incorporate parallel or in conjunction to their physical therapy services and practices so that they can expand not only the number of offices but expand operations in different services and diversify their incomes. They can bring in laser, they can bring in exercise programs, home exercise programs, gyms. They can bring equipment that they can sell to patients and materiel, nutrition and wellness, all those are things that they can do.
To do these things, they have to get trained on sales. They have to become good sales people because all of these things are cash based. On the other side, they can follow the route that I followed through HODS, Hands On Diagnostics Services, where you can incorporate diagnostic testing within your practice that pays five to ten times more compared to a single physical therapy visit. At the same time, it is insurance reimbursable. You don’t have to sell to the patient to pay cash. This is where I see physical therapy, we have to expand our operations and our scope of practice so that we can be able to survive in a very difficult upcoming future in terms of reimbursements.
What really drew Will and I to HODS and the training in electro-diagnostics is that it was relatively easily incorporated into the current structure of our physical therapy clinics. We didn’t have to add on a completely new square footage for gym space. We didn’t have to bring on a nutritionist or learn ourselves in wellness practices or something like that. Simply we could add those services on as part of our physical therapy and completely within our scope of physical therapy practice, both with the diagnostic ultrasound and the EMGs.
I want to mention that EMGs is one of the major components. At the same time, musculoskeletal ultrasound can be a major component also. Evoked potentials, videonystagmography, VNG testing for patients with vertigo and even in patients who have hypertension and hypotension, autonomic nervous system testing is also something a physical therapist can be involved in. Physical therapists can be involved in doing Transcranial Doppler Testing as well as an electroencephalography testing. There is very large gamut of things that the physical therapist can be directly involved. Many of these will be directly reimbursed to a physical therapist. Others, the physical therapist will have to do them in conjunction with a physician or under the auspices of a physician.
There’s been talk in the past about our ability to eventually perform and read x-rays. What are your thoughts on that? Just as a tangential discussion.
Actually, this is a fact at this point in a few states around the country. It is the position of the APTA that the physical therapist should be able to not only interpret and use, but also order imaging for patients who they treat. This is something that will happen, I believe, within the next few years.
I love your passion and your vision because it’s completely applicable. We need to take a stand for those services that we can provide within our scope and not let them get away from one reason or another dude or groups that would rather us not be doing some of those services. It’s important for us to take a stand and create a greater vision for what we can actually do.
If you don’t mind, Nathan, I would like to plug in something else also in your program that on September 21 and 22, Friday and Saturday, HODS is going to sponsor a private practice summit in New York for private practitioners who would like to find out more about how they can grow their private practices, how they can incorporate a lot of these services. Also find out new tricks on how they can do their billing more efficiently, and so on and so forth. I don’t know if I’m breaking the news to you on this, it will be hosted by your business partner, Will.
Then it’s going to be great. I know it’s going to be awesome. Thank you. If someone wanted to learn more about that summit, where would they go?
You addressed the reduced reimbursements as the issues facing PT owners. Let’s move on to number two.
Staffing is an issue because of two main reasons. Reason number one, the number of available physical therapists in the country is much lesser than the demand for physical therapists. This issue was increased a couple of years ago when the immigration laws slightly changed in regards to specific professions including physical therapists. It is proper now to bring physical therapists from the Philippines, from India and other countries. The United States was the number one importer of physical therapists from India and the Philippines. This right now has changed. It is more challenging to do that.
That creates a lesser number of physical therapist available in the marketplace for them to be hired. There is a competition with higher salaries. Who is going to hire these people? Hospital organizations can afford much greater salaries that you as a private practitioner can afford. The second reason why it becomes more difficult to hold staff in a practice is because as reimbursement goes down, you have a lesser ability to pay staff bonuses and higher salaries as a private practitioner. No matter how much staff members love you and they have been with you forever, if somebody next door can offer them $15,000, $20,000 more per year, many people will take that offer.
They probably should. That goes to the point. Reimbursement rates are going down, the demand for physical therapist is going up, and so the salaries in turn go up.
There are three solutions I will give you about the staffing problem. Number one, create a team environment. People will look at the money, but number one, they will look at the way they get treated. If people are treated well, they are not going to start looking for another place to be hired.
The studies prove that money isn’t the number one driver for people in their employment. If they can find something where they can align with the purpose of a company or feel like they’re a part of something greater than themselves, or nowadays a lot of talk is about culture and how strong it is and I completely agree with that. If the culture is right, you have a team atmosphere working together for a single purpose and alignment that will override their demands for money many times.
As I said, three solutions. Solution one was exactly what we just said about team spirit, team culture, an environment that promotes growth. Number two solution, create a program where people can grow professionally by helping them with continuing education. This can have many different forms. You can seek continuing education from various organizations out there like Hands on Seminars or you can do in services within the organization, something that makes people feel that they are growing professionally. Number three is create an appropriate bonus system where people can be bonus for production. What we have seen a large number of HODS members around the country, because they make more money through diagnostics, they can afford to pay greater salaries and greater bonuses to those staff members who are involved in the diagnostic area. I’m going to give you a very specific example on that, Nathan.
I’m going to speak numbers now. When I hire in New York a physical therapist for my physical therapy practice, I pay somebody right out of school as a physical therapist somewhere in the neighborhood of about $65,000 to $70,000. If I hire somebody right out of school to work for my diagnostic business, I will provide them the entire training and I will start them at a salary of $85,000. That’s the minimum salary that I pay. Later on, I ended up paying them much higher. They can reach to $100,000 to $120,000, and so on and so forth.
The salary itself is higher but the training that they’re getting on top of that only makes their credentials greater, which allows them to earn more down the road.
That’s about staffing.
Going back to the points number two and number three, one of the successful actions that my friends in California, Brandon and Richard, are doing at Coury & Buehler Physical Therapy, they shared with us was that they developed a mentorship program for their new grads. Between the staff of PTs that they had and they themselves, they had a specific mentorship program in which someone was assigned to each new grad that came in. They would spend weekends, I want to say one weekend a month over the course of a year or two, where they would dive into certain diagnoses or certain body parts as part of their mentorship program to help them learn and grow, coming straight out of school. They said that the hiring of new grads improved significantly based on that one action that they were able to provide mentorship. That rung true to a lot of the new grads coming out. The fact that you’re doing that, and I’ve seen that also as social proof in Brandon and Richard case, is very powerful.
Number three, competition. Here is the point where if you want to expand, you cannot afford to be just a clinician. You have to become a real business owner where you are looking at expansion plants and you’re looking at new, fresh ideas that you are going to bring and incorporate in the practice so that you can attract your community, so that you can attract even physicians sending you patients because you have something used, you have a niche. Whether you want to bring in a laser and promote laser or you want to bring women’s health or you want to create the TMJ program, any type of niche that you can create that you can drive people into your facility.
The more people who come in for an event or for some reason, the more people will eventually stay for services. Incorporating diagnostics sets you thousands of miles ahead from the competition because simply not everybody can do that, not every single person can incorporate that in their practices. It requires a special person who can think about this very seriously and dedicate and committed to it. That can set you up way ahead from your competition in the area.
[Tweet “Hospital organizations can afford much greater salaries that you as a private practitioner can afford.”]
That’s not just a physical therapy concept, that’s a business concept. The more you can niche down and set yourself apart, the more you’ll separate yourself from the competition, especially in physical therapy where I believe our services are becoming commoditized, to the point where you hear a number of patients I have and you may have as well, a number of people you come across might say, “Physical therapy didn’t help me.” You don’t say that about dentistry. You don’t say, “Dentistry didn’t help me.” You said, “So and so dentist didn’t help me so I’m going to find another dentist.” We’ve been commoditized to the point where people will say, “Physical therapy didn’t help me,” instead of saying, “That physical therapist doesn’t know what they’re doing or I didn’t like my interactions with them.”
“I’m going to find another physical therapist that can help me.” Because of that, it’s even more necessary that we niche out and do what we can. Plus, when you consider hospitals don’t look at physical therapy as a profit center based on my experience with hospital executives. Usually it’s a loss that they take on the books. They know that it’s got to be part of their care and they’ve got to provide it to meet certain standards or requirements or whatnot. They are not looking at it to generate a significant profit so they can provide the physical therapy. We’ve got to do something different.
Nathan, when these patients go to the hospital for physical therapy, even if physical therapy doesn’t make money for the hospital, these patients will get also their MRIs. They’ll get these diagnostic test, that diagnostic test, in the hospital. They’ll see other physicians in the hospital which creates then a regimen for the hospital. What I’m proposing here from a business aspect only, you have the audience already in your practice, you have the patients. By adding diagnostics on those patients, you are adding significant additional revenues for a captive audience that you already have in there. Simple as that.
Dimi, you’ve provided a ton of knowledge so far. It’s great. Any incorporation of those concepts for any physical therapist would increase the value of their clinics and also improve their lives. The stuff that we talked about thus far have been great. If you were to go back and tell something to your younger self as a business owner, what advice would you give?
Go first to business school and then go to physical therapy.
Get some business acumen, get some business training, whatever that is.
In one or the other way, get early on. Get to learn business management administration, marketing, PR, because these are tools that can put you in a causative position over your business. You can make you more causes to make you to be able to achieve things in your business the way you want them instead of the effect of the troubles you have and the environment.
That’s one reason why I have the slogans to step out, reach out and network. It is those steps that we take, either stepping out to reach out to a consultant, to read a different book, and then step out of your practice at a minimum of probably two days a week to do administrative tasks can be visionary for your clinic. Be looking ahead and working on your company instead of in your company, then networking and getting to know other physical therapists because a lot of them are going through the same issues. If we don’t work on these things together, then we’re going to just get run roughshod by the other segments of the healthcare professions that will take advantage of our inability to fight back.
What you’re doing with this show and podcast is a great service to the physical therapy private practice community. That’s really awesome.
What’s in the near future for you over the next couple of years, Dimi? What are your big goals and plans?
We’re still working with our consulting firms, Survival Strategies, through the years. We are in a program called Power of Choice. With that program, we are working in completely with what is called phasing to, meaning phasing out completely from three of our four businesses. Both my business partner and I want to be completely out from the PT business, the seminar business and our local diagnostic business.
When you say phasing out, you’re not selling, you’re going to be passive?
Correct. Just having only a role in the management of the businesses where the businesses have been running very effectively at 110% every single day, every single week, every single month.
You’re going to the Board of Directors level. That is great. Then what?
I have a tremendous passion about the HODS concept, the concept of creating an autonomous physical therapy industry, a physical therapist becoming an autonomous provider and becoming the provider of choice for the different diagnostic testing modalities. I want to dedicate most of my time and effort on that because I believe this can change the landscape of the entire physical therapy profession.
Dimi, if people want to get in touch with you, how do they do that?
A couple of things, first of all, DiagnosticsForPT.com is the website for the diagnostics. I have absolutely no problem sharing my cell phone number with everybody. I shared it in my emails. If somebody calls me or texts me, I do answer. It’s 917-538- 2242 or Dimi@HandsOnPT.org.
I would be surprised if you didn’t get a few calls. Thank you so much for sharing, Dimi. The concepts that you shared were invaluable and timeless and a lot of people could learn from your expertise and advice in what you’ve gone through over the number of years. Let me also say thank you for your vision as it pertains to physical therapists and diagnostics. You’re almost a lone voice out there but it’s a valuable voice for our profession, so I appreciate you.
Thank you so much for everything that you are doing every single day for our profession.
Thank you, Dimi.
Good luck with the podcast.
I appreciate it. Thank you.
- Dr. Dimitrios Kostopoulos
- Hands On Diagnostic Services
- Survival Strategies
- Blue Cross Blue Shield
- United Healthcare
- Coury & Buehler Physical Therapy
About Dr. Dimitrios Kostopoulos
Dr. Dimitrios Kostopoulos, DPT, MD, PhD, DSc, ECS is board certified in Clinical Electrophysiology with over 30 years of clinical experience. He has also MD, DPT, PhD and DSc degrees. There are fewer than 200 electrophysiology specialists worldwide who have achieved a Doctorate of Science Degree (DSc) in Clinical Electrophysiology Testing. Dr. Kostopoulos is one of them.
The doctor is a Clinical Affiliate Assistant Professor for Charles E. Schmidt College of Medicine at Florida Atlantic University. He is a past member of SACE (Specialization Academy of Content Experts) for the ABPTS examination board on electrophysiology, an elected member of the Nominating Committee of the Academy of Clinical Electrophysiology of APTA, and an adjunct faculty member of Springfield College.
He is the editor of the Diagnostic Section of the Journal of Bodywork and Movement Therapies, and the author or co-author of numerous books, articles and research papers related to his fields of expertise.