Allison Jones: Good morning, good afternoon, and good evening, and welcome to the Therapy Matters podcast. This is your one stop resource for expert insights and advice on everything therapy and rehab. I’m your host, Allison Jones, and today I’m joined by Simon Hargus, who is the owner and CEO of First Settlement Physical Therapy. Simon, thank you for joining me today.
Simon Hargus: Hey, my pleasure. How’s it going?
Allison Jones: Excellent. So glad to have you here today. So today we’re gonna discuss tips and tricks for running a successful therapy practice in rural America. There’s a lot to unpack there. We’re gonna talk about operations, staffing, marketing, everything that’s involved. But before we dive in Simon, take a minute, introduce yourself to our audience and give them a brief background on yourself and your practice.
Simon Hargus: Sure. So I’m a physical therapist and I also have my MBA. I own and run my family’s practice, which started about 25 years ago. And we’re about as rural as it gets, so we’re kind of southeast Ohio, the border of West Virginia. Actually, you know that Southeast Ohio portion’s more rural in a lot of cases than the parts of West Virginia we’re in. We started about 25 years ago, my mom’s also a PT and with one practice. And we’ve gotten up to about 37 with about 37 locations for 200 employees and that took about 20 years. The world’s quickest origin story for the company is my mom was running a physical therapy practice within the hospital setting and the administration came to her and said hey, maybe we grow this thing. Maybe we expanded outside of this hospital building, write a business plan. And my mother’s not one for business plan, she’s just PT all day. And my dad was an engineer, he wrote the business plan, she presented it and the hospital said that’s way too aggressive, so classic small business story. After that, he quit his job, they took the second mortgage and tried the business plan the hospital wouldn’t take, and it took; trials and tribulations. I feel like it has been different table conversation for me since I was a kid, and we’ve made most of this mistakes and trial by error and anything we go over is not genius, it’s all just hey, we probably tried all the other things and this is what we landed on. But that’s kind of the idea, very rural market and we’ve been able to grow. And we’ve done that growth without backing, without debt. We’re a debt-free company and been able to have a really successful happy practice.
Allison Jones: All right, great. Well, so obviously you know what you’re talking about, and you’re the right person to have here on our podcast today. So let’s dive right in. Is it possible to have a profitable therapy practice in rural America today?
Simon Hargus: Yeah, it is. I don’t know if any practice manager, which in my role, I tend to gravitate that more towards the CEO, jack of all trades would say it’s ever easy and I think there’s definitely pitfalls to avoid and there’s things you have to do to sustain it well. Especially now that we’re in generation number two and we’re more in growth mode in the last 10 years than we had originally. You know, our company was probably five to 10 clinics up until 2014 when I really started taking over and we got to that 37 just since then. So they’re sustaining it, there’s opening it, there’s growing it, all those things I think are completely possible. And we’ll get to this, you’re just solving a different set of problems sometimes that I think maybe you’re solving in a metropolitan area or more population dense area, so you approach those differently.
Allison Jones: Okay, so let’s break that down then. So if somebody is coming and they want to open, they’re sort of starting from the beginning and they’re looking to open a practice, what’s your advice? What’s your tips for getting started?
Simon Hargus: You know, a goofy one when you’re just staring at Google Bats maybe, that we stumbled upon because we did a lot of that and it was a couple tenants we kind of live by that avoid islands if you can have them. Now if it’s your first clinic that’s in of itself is an island, but the cost of everything, if it’s not overlapping with something else you’re doing is higher. So the staffing, the marketing, especially in a rural market. The other thing, the shorten or quick and dirty rule we always live by when we are analyzing a city and trying to find a new place was if it had no competition, a supermarket and a high school, we were driving around that town. Now it’s not always easy anymore to find a place with no competition, but fundamentally, you’d look at the low hanging fruit first, and if we ran across a town within our footprint that wasn’t too far out of our perk footprint, making an island and at a high school, had a supermarket and it didn’t have any competition, it just lent itself like, oh, we need to check this place out. It’s not a given that it works or that it’s a place we go to because there’s a lot of steps after that. But that in of itself would usually put us on the ground looking at rent, looking at spaces, talking to local providers, seeing what that referral relationship and those habits are, how accessible is the local high school. What’s the community like? How many smaller communities are feeding into this one which is usually a really big player. And then the big ask is can you find staff for this location, which is the fundamental problem in a rural market.
Allison Jones: So explain the supermarket piece of it. I think I might understand the supermarket connection, but explain that a little bit. What’s the tie in with the supermarket.
Simon Hargus: You know, some of it’s intuitive after 25 years and we work backwards and did saw a pattern of successful satellites. But a lot of it is if you’re going it from the other direction and trying to look at a population number and then trying to look at maps of where these small towns are funneling into, what you’ll find is the results of most of the small things you’re looking at end up being oh, there’s a high school here and a supermarket here. Because this is the funnel place, right? And it has enough traffic and it has enough population to sustain those things. So it ends up being just an easier way of searching. So when I’m looking in a particular place on the map, I might start at the point of just let me look at the high school and then I’ll overlay, let me look at competition, and then I’ll overlay what kind of supermarkets are there. And it’s funny in a rural market, the other thing, and talking numbers, a successful satellite clinic is like a hundred visits a week. And that might be crazy small to some folks, but to us, that’s a successful satellite clinic. And I have clinics where there’s literally a traffic light, a high school, and a supermarket. Nowadays, probably a Dollar General, maybe a subway and you’re looking at it like that’s it. And it’s like there’s no way a clinic’s gonna work here, maybe a library or something. And it does if there’s enough small towns, and that’s the funnel place, and that’s really the only option. We’ll have clinics that it’s the only outpatient clinics in the whole county and that’s how rural we’re talking about. But it works if you can find the staff and you can find the right location and some of those other factors are playing. And there’s some real advantages and we’ll talk about that. It’s like yeah, I just said no competition. There’s advantages there. You know, these places are cheap to be in, you just have to be smart about where you’re placing them.
Allison Jones: Okay, well let’s talk about some of those advantages. What are the advantages?
Simon Hargus: It’s so easy to go over disadvantages in a rural marketplace. Everybody’s gonna say, well your payment rates are bad and it’s hard to find staff, and it is. And I think unlocking the key to all of this is a long form of conversation about staffing. But I think some of the advantages to just get people interested or thinking about remarketing is hey, there’s often no competition or a low level sophistication of the competition. A lot of times, I think in more metropolitan areas, you’re always dealing with very insular, vertically integrated hospitals and health systems, right? But the closest health system to a lot of these places is an hour and a half to a three hour drive. So all of a sudden, they’re not telling these patients, hey, you have to drive that distance three times a week for your physical therapy for this specialty, you know, somebody had a surgery or a stroke or something, that’s not the case. So it’s an easier conversation to be like, here’s an easier conversation even to have with a vertically integrated health system that’s a drive away saying, oh we’re not competition so we can talk. That makes it easier.
I think another big thing that makes it easier is just the cost of space. And West Virginia, the whole state’s like a million and a half people, like our entire state is like the population of a real sized city. But I’ve heard some of their rents, and in a lot of these places, my lowest rent is $8 a square foot. Now not everybody’s there right, but it ranges from 8 to $14 a square foot as the typical range. If people don’t think in terms of square foot, think in terms of I can have a 3000 square foot clinic, which is actually a lot bigger than what a lot of metropolitan areas would have. To me, that’s medium. We rearrange 2,500 to 8,000 square feet, but a 3000 square foot clinic in a rural market might be 2,500 a month. You know, that’s cheap to be there. There’s a lot of variety you can have, there’s a lot of programs you can run in this space that big and it can be a bit of a center for that town in a lot of different ways. So there’s definitely advantages I think.
Allison Jones: So let’s switch to a disadvantage and it’s not a disadvantage, but it’s a challenge; staffing. Staffing is a challenge across the board, whether you’re in a metropolitan area, whether you’re in rural, it’s a challenge everywhere. So how do you deal with the staffing challenge and staffing shortages and how do you staff up all of your clinics and make sure that you’re able to address all the needs of your patients.
Simon Hargus: I think at least with our story, it started with it. And one of the pros and cons of staffing too is when you get somebody that wants to live here, it’s usually because they have roots here. They wanted to move back here, but not always. So on the one hand, it’s harder to find people that wanna live in the rural area, but your turnover rate is also just wildly low if you’re doing things right. But for us, especially if you looked in our company, as I said it’s like okay, we had 10 ish clinics in 2014 and we got to 37 and the fundamental driver behind that was solving that staffing part a little bit. And I think one of the key changes for us is we had so much experience courting and developing referral relationships. I think every PT does to some extent. And there’s direct access here, that’s not to say there isn’t. And that long form of relationship and conversation and touchpoints. What we started really doing is any school PTA or PT school that was within a three hour drive. Spending a lot of time treating that program like physical therapists had been treating the doctor relationship. High touch points, stopping by what can we do for you? How can we partner? How can we take our internships to the next level?
A big part of it for me in taking over the practice was we didn’t really have a culture of every clinician is expected to not just take, but enjoy and make it part of their practice having students. And not just the students in the schools. This is hard enough in a rural marketplace where we’re starting to take observational hours, all the way back in high school and some of those kids now, and that’s because we’ve been in practice long enough, are the people we end up hiring. That might seem a daunting task, but it’s that hard to staff here, right? And then it’s that long form of conversation, but we also take it super seriously. We don’t miss an observational hour opportunity from any level. All our clinicians are required after two years experience to be taking students. There’s even a trend right now where well students are a burden, we’re gonna charge them to be here. Any final year rotation student, we offer a $500 stipend. And we even have a few clinicians that have remodeled the basement, including my mom.
So I’ll have people living in my parents’ basement with free housing. So if you are offering a $500 stipend free housing, that might sound like overkill, but that’s how important of a problem it is to solve. And once you get that exposure, you’ll get even the folks that weren’t moving back here just for family, you’ll get the folks that really had no destination. And there’s a lot of anxiety with new grads graduating. What am I gonna do? Am I gonna get thrown in? They tend to lean towards anybody they had a previous relationship with, just as a solution to that anxiety. So it was really about university programs and student relationships. Like we were already treating doctor relationships, developing them, going after them, being very aggressive about going after them.
Allison Jones: Yeah, you’re creating a loyalty program with providers. I mean instead of doing it with your patients, you’re doing it with your future providers.
Simon Hargus: Yeah, and straightforward examples. So the apartment we use that’s free housing, right now the industry, and this is, I guess, teaches a lot of PT schools and it’s really interesting because I poll them, four or five schools and the percentage of those kids that wanna do travel is really high. It used to be that you’d have a few per class and now some of these classes have 20% of the kids that want to go right out of school and to travel. And that’s unusual because travel companies that use folks with that low experience level and they weren’t that interested because they didn’t have any experience in the nature of travels to get thrown in because of all sorts of factors, debt and whatever. But just going back to forming those relationships, we had them for rotations. I had two kids that wanted to travel and said hey, instead, do travel for us for a year and take advantage for the first three or four months, six months of some free housing. Which is gonna counteract that housing stipend, some of these travel folks and do it internally. And they immediately jumped on it because they’re already familiar with us and we had talked to them going back six or seven years.
So yeah, it’s really treating those relationships and as much as you would treat going after patients or going after docs. To solve that staffing equation, you have to be, I think aggressive, makes it sound mean, but wildly, you gotta take the initiative in every chance. Meet the professors, meet the students, guest lecture. Every school in the country would love somebody from your class to come and give a free lecture on some random topic. If you’re not doing that you’re not forming those relationships because then you’re seen as an expert. So when I say a lecture sub, you know, I do the ethics class for free, I do the business classes for free, do a lot of the mock interviews so the kids are getting used to, in that final year. You’re literally doing a mock interview with the student graduating, and you hear like this is where they wanna live, and it’s in your footprint. It’s like hey, after this you wanna have a real interview, you know?
Allison Jones: Come talk to me.
Simon Hargus: Yeah, right? And so every one of those opportunities, I feel like to be successful on the growth side or even starting it on the staffing side in a rural market, if you’re not taking advantage of those, it’s actually pretty hard to sustain over time because if you do lose staff, it’s really difficult.
Allison Jones: Wow, that was a lot in there. That was amazing, thank you. So a couple other things. So one thing that I really wanna talk about, because it’s near and dear to my heart, being in marketing, gotta talk about marketing and how you create that patient connection. So we just talked about how you’re creating connections with future staff and how you create that sort of loyalty there. How are you creating the connection with the patients in your communities or when you’re going into new communities and spinning up new practices? How are you getting the word out? What are you using for your marketing mediums? What have you seen has been most successful for you? How do you create that ongoing connection with them? Gimme some insights there.
Simon Hargus: Well I’ll start with some contrast because I think there’s some overlapping areas I assume. And hey, are we all doing some targeted Facebook ads? Yeah because I think it’s a cheap and easy way to do it and Facebook’s still probably really maybe a little more powerful here than the rural marketplace than it is in other places. But I think some bigger differences and some advantages are, I think there’s types of marketing you’ll find here where it’s just not cost effective for a whole bunch of reasons to do it. And TV is a real option. I’ll give you an example. It’s cheap, you get a lot of eyeballs, it’s where people get their high school sports radios, especially with high school sports. You get a lot of ears, and it’s not cost prohibitive, which is strange because the same thing with billboards which I think have a terrible ROI and then a whole lot of fields. But the right billboard in a rural marketplace when it’s the only billboard in town is something folks talk about. And there’s even more weird stories and I have them for like half of our clinics of the weird, in a rural marketing place, marketing ideas that you’ll come across. I’ll give you a couple of my favorites.
So one new clinic we just opened up in the last year, and I was talking to the town and the mayor, and they had this odd idea and they’re like, would you even try this? It’s like, I love it, I’ll do it for six months and they just wanna do it. So their main street had meters and they were going to do a business sponsorship meter where it’s like hey, what if we put these bags over it? And it looks pretty, like it’s bubblegum and shoestring, but literally just a plastic bag over it, you put a color print out and say hey, this meter is paid for by this business. And they do the whole street and they’re thinking a week, and they told me the price and it was like I have 50 bucks or something. It’s like hey, how about I give you a thousand bucks and we do like six months and they’re like you wouldn’t do that, it’s like a hundred percent. Basically the whole town’s meters are gonna be paid for almost nothing. Every meter has our flier on it. Are you kidding? This is a no-brainer. You’ll run across these really weird ideas that end up over a period of time, hitting everybody in town because of the centralized location.
Here’s another one, and this is one of our oldest clinics. So we were starting this clinic and they still had a movie theater, and a lot of the towns we’re in the rust belt. These movie theaters are often closed buildings, but this one still had one, it was really interesting. It’s owned by the county, it had one screen, it’s money off the concessions and we went in and nobody had done this before. And every Friday night the movie was sponsored by our clinic. Everybody in town could go there for free. And it was the first time they had had a line at the door in a decade. And so that was working where it’s like, this is working well, but I think we could take it to a next level. So what we ended up doing, and we ended up doing this for like a year, you had to come to our clinic to pick up your free ticket. And you’re like, oh my gosh, how expensive. It was like 300 bucks to buy the entire town’s movie night sponsorship at every Friday night. So over the course of the year, some crazy percentage of everybody in the town had actually walked through our clinic to get their free movie ticket.
So you’ll find these really nutty marketing opportunities that I just don’t think are easily available when you’re just talking about this huge, giant, crazy place where everything’s expensive and there’s just so many people happening. The touch points you can get in a small market end up being really interesting for really low cost if you’re out there talking to folks and talking to the pharmacies. If you just do bingo once a month at a senior center and do their Turkey dinner, and that county ends up having a really vibrant senior center, you have a huge percentage of your demographic that’s insanely loyal to you. And for all the ROI on that is off the charts, and once you get those playbooks, it’s not hard to run them again because the core components of these places, a lot of these places are the city center of a county. Where okay, the courthouse is here, the senior center here because there’s not a whole lot else in the county. So it’s like okay, which one of these ideas is gonna work in this town? And then you bring in the high schools, but a lot of us are already in the high schools doing stuff. So I’m trying to give examples that are a little bit more out of the box that are attuned to a rural market, which I just don’t think you’d see some of that stuff maybe in a big city. I don’t know. I’ve not been to a big city that much.
Allison Jones: Yeah, no, I think you’re right. I just don’t think those types of opportunities would present themselves. Because I think a lot of what you’re talking about is based around creating connections with your community. And I think that’s a little bit harder when you get into a bigger city. It’s harder to have more of those personalized connections just based on size. It’s just harder to do that.
Simon Hargus: And I’ll put it under the marketing category when you talk about connections. I think that’s also one of the risks when I was thinking about this topic or downside is we all worry about reputation management. But when your pool of referral sources, community resources, all these things is so small, you don’t get many strikes. So I think in your admin policies where I’ve seen people be unsuccessful, and you have to rethink some things. You might take a class at PPS or something and they’re like hey, you have to be crazy hardcore about co-pays, or you’re just gonna have a failing practice. Or I’ll give you another example. Somebody runs over an auth and you’re just like nope, that’s it, you gotta get more auth through your insurance company. It’s like oh okay, we’re gonna go so many visits past that and if we don’t end up getting an auth that charge doesn’t go to you, we’re just gonna eat it. Or if our IV person, which we do that, we explain their benefits and we call their insurance for them. And you can call an insurance company and get a different answer every day, but if something we said was wrong and you didn’t understand it, we’re gonna eat that cost because that reputation management where you might be in a town where there’s literally three primary hear [inaudible 25:07] like that’s it. So you can’t really ruin that relationship off of a hardcore financial policy that’s not really seeing the forest from the trees and your volume is lower.
And I think from an operations standpoint too, we err on the side of relationships. So we err on the side of a longer visit which was commonplace 15 years ago where the economics of if you were in a clinic where you had more visits than you had people and getting visits was a problem. A 30 minute visit, a 45 minute visit makes a lot of sense. It decreases your risk with cancellations. The math always works itself. In a rural market where it’s all relationships and your goal is if you hit it out of the park with this person, you’re gonna see their entire family, which I know is what we say in any clinic, but it is literally what happens here. You lose or get that whole family. So you err on the side of longer visits, you err on the side of eating some of that cost. That’s not as sharp a pencil as my dad would say on the admin side, but to me that falls in the category of marketing.
Allison Jones: Absolutely. So I wanna go back to what you were talking about real quick. So you had talked about going from 10 to 37 clinics, right? That’s a big jump. What were three things that you did to make that happen?
Simon Hargus: Sure. I think first it was like flipping a switch. I required the staff to start having students, and I didn’t know how much of a switch that was. If you go to one thing, it was okay, only the staff that wanted to, and even they complained about it too, no guys, we’re gonna do this and we’re gonna like it. And once we started doing that, we started getting the resumes, we started getting the relationships. I think that was as much as anything to faucet. And then we started learning how to develop those relationships. I think we went backwards and looked at the commonalities of the clinics we had that were successful and we got really good at being able to drive through a small town and easily say hey, we need to take this really seriously or not. I think the other thing we got really good at, and it’s kind of like you learn all those lessons in the first half or two thirds of the practice. And then you package them up and start implementing them.
I really went by this idea that you could staff a network of clinics with less people than it would take if each of them were an island. So we have a fundamental core staff in every clinic because consistency is important and relationships are important. But we also, and this is part of our culture and part of the folks, especially the new grads, they come in and they know, hey, you gotta float a little and you’re gonna earn your home base. We have networks of clinics and networks of staff where there’s a percentage that flows and breeds with the natural ebb and flow of visits and evals in any clinic. And what you’ll notice in any clinic is it’s seasonal, it’s referral based, there’s 10 different reasons. You know, this stock likes to take us on vacation here. So there was a frost the other day, and in six weeks everybody’s getting their casts off for the proximal humeral fractures and distal radial fractures. There’s an ebb and flow to clinics when you’re understaffed and you’re overstaffed. What we started trying really hard to do is have networks of clinics, and this is very decentralized, of small clinics in groups where we could breathe with that ebb and flow with some percentage of full-time people that are traveling in between those clinics who’s busy and who need the help. And if you looked at it from afar, you were now running adequately with proper staff and hitting your metrics in those networks. But if they were all by themselves, you would have to have X number more staff than you’re actually using.
So that efficiency and a lot of debt growth gets to how you can get really efficient when 40% of your payer mix is Medicare, 10 to 15% of your payer mix is Medicaid. You know, if you’re lucky, you’re getting 10% comp, maybe 15% if you really have a plan or something and the rest is commercial. And even some of the commercials in southeast Ohio are paying less than the Medicaids and they’re capitated visits. So there’s a lot of efficiency you have to get good at. And that’s just a few of them, but I think that the biggest efficiency we learn is how to run in those networks of clinics and networks of staff. And staff them adequately, but with less staff than if they were all by themselves. I think the other thing we err on the side of and we really ran with is a decentralized model. In a rural marketplace, you’re gonna come across this large vertically integrated health system that everybody’s driving to within a three hour radius. And if you can be as efficient in the suburban and rural areas around there, and have these little networks of clinics where patients can drive 20 minutes instead of 45 minutes to get to their PT, it’s a no-brainer for them. And that’s the other fundamental thing that really took off the practice. When we started picking on hospitals where in the surrounding areas there was an outpatient competition, it was too centralized, in my opinion, for something that’s as high touch as physical therapy. So we did a lot of decentralized small clinics in these tiny towns around it and ate their lunch.
Allison Jones: Excellent. All right, well we’re getting close on time here, so one final question. So if there was one final bit of advice that you would give somebody about helping them grow or helping their practice thrive, rural or not, what would it be?
Simon Hargus: You know, final piece of advice. I think the first parts and the mistakes I’ve seen go back to where we’re undervaluing what a student can bring, both after they graduate and before, and what a strong relationship with a university can bring. I think in general, even with the 15% cut that just happened, I think we’re undervaluing what a long-term well-trained PTA can do. We don’t run super high, and we’re not one to five or something, if you do the average, we’re probably one PT to one and a half PTAs. I’ve heard a lot of discussion about PTAs in the 15% cut. I think to make this work here is to not give up on that relationship and get everything out of it that you can and take the training seriously I think would be the second advice and thing. The discussion. I see where I think I have a pretty strong opinion of it, especially going back to the school thing and people trying to charge students to come here, if that’s your mindset, you’re doing it wrong. You’re just looking at it wrong, you’re not getting what you can get out of that relationship.
I think the other big thing that we were slow to come across, and my other favorite thing to say about rural markets, and I’m guilty of this as well, hey, we still have a couple towns of video stores. We’re 10 years behind on some trends, and everybody in the industry’s been saying direct access, but if you go past that and just talk about marketing, how to outreach digitally with some sort of communication ad, whatever it is, and then have an automated funnel that goes from okay, an automated communication, they’re serious enough that turns into a real person communication, you have to be doing that. Even in a rural marketplace, you have to be doing that. And you have to be getting good at it. You can’t be anymore like oh, we’re gonna start this, it’s like the game’s leaving that a little bit. And you have to find an EMR that does it, or you have to find some internal way to do it. I think internally it is way too hard if you wanna have that level of sophistication with the automation in the beginning parts of the funnel. But if you’re not actively, proactively reaching out to former patients, which I see a lot of places doing, but reaching out to folks in different ways that you’ve never had a conversation with and getting into some sort of funnel, you’re getting behind.
Allison Jones: Yeah. I mean, it’s just an expectation nowadays, right? That’s how we communicate with everybody that we interact with, it’s just how it’s changed..
Simon Hargus: And 10 years ago in a rural market I would’ve never used it. I wouldn’t have known what that even meant. So it’s even here and it’s not just here, it’s absolutely required.
Allison Jones: Yeah, absolutely. All right, well that is great advice. Thank you so much Simon, that was a wonderful talk.
Simon Hargus: Oh, thanks, this was awesome. My pleasure. I’m glad you guys are doing this.
Allison Jones: I think this applies across the board and I think there’s a couple themes in here that everybody should pay attention to. Relationships is what I heard a lot of through what you were discussing today. Relationships are so important. Relationships with building your staff, relationships with your patients, that’s such a key piece to having a successful business. Thinking outside of the box, so when you’re talking about your different marketing approaches, you have to figure out what works in your market. So it might be putting the bags on the meters and paying for that for six months. Or it might be a really big digital billboard in a city square. So you have to figure out what is gonna work for your business and your space and your budget, obviously, but don’t limit yourself to what you think is the norm, right? So try to be innovative, try to think outside the box. So I think there’s a lot of great takeaways here for folks to grab onto. So I really enjoyed the conversation. Thank you so much for being with us. And as always, we hope that our listeners take away a few nuggets that they can internalize and take into their practices. So thank you for listening to Therapy Matters Podcasts, your one-stop resource for expert insights and advice on everything therapy and rehab.
We hope to see you on the next episode!
