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Physical Therapy


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  • Writer's picturePatientStudio

How to Start a Successful Hybrid Physical Therapy Practice

The world of Physical Therapy is undergoing a significant transformation. As payer payments continue to stagnate, PT practices are seeking innovative ways to diversify their revenue streams and better serve their patients. One such innovative approach is the Hybrid Physical Therapy Practice model. This model combines the benefits of in-network, out-of-network, and cash-based practices, offering flexibility in terms of both care and cost.

However, transitioning to a hybrid model requires a deep understanding of the benefits, challenges, and the necessary steps to make the transition smooth and profitable. This article sheds light on the intricacies of the hybrid model and offers a comprehensive guide for PT practices aspiring to transform their business model.

Understanding the Landscape of PT Business Models

Before delving into the specifics of a hybrid model, it’s crucial to comprehend the four primary business models currently employed in PT practices.

1. In-Network Insurance Clinic

The 'In-Network' insurance model is popular among PTs, allowing patients with participating insurance providers to access services at a pre-approved amount.


  • High patient referrals due to in-network status

  • Less marketing pressure and sales training burden


  • Declining reimbursement rates.

  • Increasing patient care restrictions.

  • Credentialing and contracting pressures.

  • More documentation and authorization requirements

2. Out-of-Network Clinic

As an out-of-network provider, PT clinics are not bound by insurance providers' rules and regulations.


  • Flexible physical therapy billing and collections options. (Balance billing, courtesy claims, superbills, etc..)

  • Higher profit margins


  • Requires understanding of OON insurance benefits

  • Educating patients on plan or coverage details

  • Difficulty in convincing physicians to refer out-of-network

3. Cash-Based Clinic

Cash-based clinics operate independently of insurance contracts, with patients bearing the cost of their appointments.


  • Flexibility to determine and adjust rates

  • Increased treatment options

  • Faster time to payment


  • Increased referral challenges and marketing needs

  • Difficulty generating consistent patient value

4. Hybrid PT Model

The hybrid model combines the strengths of both cash-based and in-network models while balancing their challenges.


  • Increased revenue and better profit margins

  • Ability to serve a wider range of patients


  • Increased complexity of operating two separate business models

The Allure of the Hybrid PT Clinic Model

The hybrid model offers a unique blend of benefits that make it an appealing option for PT practices. By combining in-network services with cash-based options, a hybrid practice can provide greater access to care and offer patients more choices.

Further, with the flexibility to accept in-network patients and out-of-network or cash-based patients, hybrid practices can significantly increase their revenue. The model also enables faster payment times by avoiding prolonged insurance payment periods.

Setting up a Hybrid PT Private Practice

Transitioning to a hybrid model requires careful planning. The first step is to determine your company/entity structure.

Single Business Entity

Benefit: Easier to set up

Challenge: Managing in-network vs out-of-network patients and plans

Most clinics fit into this category. They operate as a single business entity with one EIN. They maintain contracts with numerous insurance companies, known as in-network payers. They provide services to patients covered by these insurances and receive referrals from physicians aware of their insurance acceptance.

in addition to the in-network patients, these hybrid clinics also accept patients from non-contracted insurance companies, referred to as out-of-network. Typically, reimbursement rates are higher for out-of-network payers. Usually, the patient has a deductible that must be met before the insurance company offers any reimbursement.

After the insurance company has paid the "usual, customary and reasonable" (UCR) amount, the patient is billed for the remaining cost. This process is known as balance billing. In this scenario, the patient covers the difference between the provider's charge and the amount paid by the insurance company.

Out-of-network benefits can vary significantly. Understanding each patient's insurance plan and benefits is crucial. Essential information to review includes the out-of-network deductible and co-insurance. It is advisable to leverage an instant or real-time benefits check to help educate patients on their plan benefits.

Multiple Business Entities

Benefit: Easier to operate

Challenge: Navigating legal and payer requirements.

This is common when practice might want to provide an array of wellness services that insurance does not cover. These could range from dry needling, cupping, nutrition coaching, and athletic training to diagnostic testing, among others. Offering these services allows a practice to provide comprehensive care and create diverse revenue streams. However, patients must be aware that these services might come at an out-of-pocket cost. Set up two separate companies with two different tax ID numbers. One company operates as a participating Medicare provider, and the other operates as a non-participating provider. The two companies need to have separate mailing addresses and business names to accompany the tax IDs. Having two separate physical spaces (e.g., suite A and suite B) is the preferred option to avoid any regulatory issues with Medicare or other payers.

Providers treating patients under the in-network insurance tax ID should be enrolled as Medicare providers, while therapists serving OON/cash-based patients would be non-participating providers with Medicare.

While legally separate, these two entities should function as a unified practice. This approach allows you to serve all in-network patients while capturing out-of-network and cash-based patients.

One way to view this OON practice is as a "continuing care model". Often patients still desire treatment to reach their goals, even if insurance no longer deems it "medically necessary". This is a great opportunity to continue rehab with OON services.

To simplify management, consider adopting a practice management solution that can accommodate both insurance billing and cash-based payments. Additionally, direct your marketing efforts towards one practice, with overflow directed to the other practice.

Marketing Your Hybrid Physical Therapy Practice

Successful marketing of your hybrid practice requires a keen understanding of your unique selling proposition and effective utilization of internal marketing channels.

Leverage patient testimonials, online reviews, and physician referrals to promote your practice. In addition, investing in a dedicated marketing specialist can provide a greater return on your investment and generate more leads.

In your marketing efforts, highlight the benefits of your hybrid model, such as greater access to care, more choices for patients, and better patient outcomes.

Collaborating with Referring Physicians

Building strong relationships with referring physicians is critical to the success of your hybrid practice. Consider engaging more directly with your patient's primary care physician or other referring physicians, either through a letter introducing your practice or by accompanying your patient to their follow-up appointment.

Understanding Your Revenue Targets

Identify your average reimbursement targets and measure your performance regularly. If you're not performing enough services to meet your goals, consider ramping up your marketing to attract more patients.

Technology Requirements for Hybrid PT Clinics

Managing a hybrid model requires robust practice management software that offers unified insurance claims processing, payments, and patient communications. A comprehensive practice management solution like PatientStudio can significantly simplify the management of your hybrid physical therapy practice.

Insurance Verification - electronic eligibility checks can be a game changer when it comes to understanding your patient plan and PT benefits. Benefits checks can give you a real-time breakdown of deductibles, current amount to deductibles, coinsurance and more.

Flexible documentation - Custom evaluation and daily note templates will allow for proper documentation of all services performed by all types of providers.

Automatic charge capture. Therapists don't want to worry about CPT codes or the number of Units. Simply record the treatment and the amount of time spent and PatientStudio will automatically calculate units based on the applicable 8-minute rule.

Claim Submission - Submit claims to in-network and out-of-network payers.

Balance Billing - The patient covers the difference between the provider's charge and the amount paid by the insurance company.

Courtesy Claims - Submit claims on behalf of your patients. Decline assignment so reimbursement goes straight to your patient.

Superbills - Provide a statement for patients to seek reimbursement.

Credit Card Processing - Automatically charge patients for treatment, copay, coinsurance and wellness services.


The Hybrid Physical Therapy Practice model presents an innovative approach for PT practices seeking to diversify their revenue streams and better serve their patients. Despite the challenges associated with transitioning to a hybrid model, the advantages significantly surpass them. This makes it a feasible and beneficial choice for progressive PT practices.

By understanding the landscape of PT business models, identifying your revenue targets, and leveraging practice management software, you can successfully transition to a hybrid model and position your practice for long-term success.

Remember, the goal of adopting a hybrid model is to provide the best possible care for your patients while ensuring the financial viability of your practice. Therefore, take the time to plan, strategize, and implement the transition to a hybrid model carefully, and you'll reap the benefits in the long run.

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