Kelly Alhooie explains how to calculate hourly-equivalent pay for cash-based physical therapists (PTs) and occupational therapists (OTs), using salary division (annual salary ÷ 2,080 hours) and per-visit percentage models. She contrasts common employer practices (paying ~40% of visit revenue) with her recommendation (max 25% of visit revenue), outlines a rough business expense breakdown (rent, taxes, employees, overhead), and gives target profit-margin ranges for brick-and-mortar (prefers 15–25%) versus online practices (higher, ~70%). The episode closes with a sponsor message for Jane scheduling software.
Questions this episode answers
$90,000 ÷ 2,080 = $43.26 per hour.
$100,000 ÷ 2,080 = $48.08 per hour (spoken as "48" in the episode).
$200 × 0.40 = $80 per visit.
$250 × 0.25 = $62.50 per visit.
25% (host states this as the maximum she pays).
Chapters
You, let's break down how much a cash based PT makes per hour. And yes, I'm talking about you as a physical therapist or an occupational therapist, how much do you actually make per hour? So let's get into it. So today, if you have any questions, by the way, text us 703-783-2388. Go ahead and text us any questions we'd be happy to answer. I'd be happy to talk to you specifically. So let's get into it. I'm going to pull out my handy dandy calculator here. So how much does a cash based PT or an OT make per hour? This is the big question that you guys have been wanting to get into and I'm going to break it down for you. So if you guys are demanding, let's say $80,000 a year to over $100,000 a year, now, I know because I hired about 30 people with this. Most people when they come out, they are wanting $90,000. Okay? So if you make $90,000 a year, okay, if this is your salary, what needs to happen is what I do is I do 90,000 divided by 2080. So 90,000 divided by that's divided 2080, that equals 43, 26. That means that you're making $43 an hour and 26 cents. Okay? If you're at $90,000 a year, if you want to make $100,000, so you do the same thing. So it'd be $100,000 divided by, so $100,000 divided by 2, 080, that's equals 2, 080. That equals 48. Okay? A traditional asset outpatient, whether or not you're pelvic or orthopedic, you're probably going to be making somewhere around this. If you are full time. Okay? So this is for full time and this is for salary. Okay? Full time salary. If you are, if you are not salary. And let's just say some people will pay. Oh my gosh. I, there was such a big example of this, okay? So I just had a coaching client contact me and she said, Kelly, I googled what you should pay your employees and it said 40 to 50% of what you are bringing in. So hear me out on this. Let's say you, you people are paying you $200 a visit. So it's $200 a visit. A visit. Okay? So people are paying you that and you're going to pay your provider, let's just say 40%. Okay? So 200 divided by 0.40, that equals. No, hold on. Times 200. Times 0.40. That equals $80, guys. $80. Hopefully you can see that. So we do 200, which is the dollar amount times 0.40. That equals $8. Okay? $80 per client that the, that the PT or OT would be, be receiving. So PT, OT. Okay? So guys, if you compare, traditionally this is what's happening. If you work at a full time outpatient, whether or not it's cash or even insurance, typically this is about what people are coming in for. And you're going to basically be capped at the salary, just so you know, because it's very hard to go up from here. So now, comparatively, this person right here is paying $80 a visit and they're only charging the 200 a session long term. I'm just letting you know this isn't going to work. This does not work. What has to happen is I pay typically no more than 25% of the visit rate. So if we charge 250 a session. So I charge 250. So 250 a session, okay, now what's 25% of that? So let me get out my calculator. 25%. And by the way, this is max that I pay is 25%. So 250 times. So that equals 62,5. So we do 250 times 0.25. That equals 6250 max. This is what if I charge $250? Okay, this is max. $62.50 is max. I would pay per patient that they see. So this is per patient. Okay? So that's what I would do. Now if you want to increase, if you want to pay the, if you want to pay PTS and OTs more, then this has to go up. But here's the thing, there's only so much that this is going to go up because how much more can a patient pay? So you have to be very mindful of that. Okay? And so this is key is you've got to make sure that the patient can pay what you're asking them to pay and that the therapist is happy with this. Now, there's other ways to increase the therapist salary besides just strictly paying them per visit. You could do profit sharing, you could do package sharing. Again, there's other ways. It's for another video. But basically, if we are talking about what truly does a cash based PT or OT make per hour, they typically are going to be seeing, you know, one patient an hour for a cash based therapy session. Well, you're looking at again, a Normal facility is probably going to be at $43 per hour. If you are maybe at a cash based outpatient facility, it could be upwards of 62 an hour. But again, this is maxed out. Therapists cannot, I would not put a therapist at a higher salary. Now you're probably thinking, wow, well, why not? Okay, the reason why is because if I go higher than this, people don't realize this, but you have expenses like your overhead for your building, your rent that you may have to pay, your lights, electric, all that stuff. Every single year goes up. And so if I start giving more than 25% to employees, just purely looking at it from this perspective, then all of a sudden my profit margins start to decrease and the business can be in trouble. So I recommend not paying more than 25% of what's coming in because. And if an employee asks you like, well, why don't I get paid more? Well, this is what I can afford. Because you're taking on liability, you're taking on all the problems that come up. You have to pay for accountants and taxes and all this stuff. And taxes, like 40%. Just so you know. So you know, you pay, you pay about 10%. I just kind of go through this. 10% for rent, pay about 25% max for employees. Okay, you pay about like 30 to 40%. People don't realize this in taxes. Okay, what else you pay? Let me think. I mean, this is a general breakdown. So we'll say 40, 50, 60, 70. That's 75% already there. You want to run, when you run a brick and mortar or an online business, a service based business, brick and mortar industry standard is 10%. So brick and mortar is technically 10% profit you want. Okay, so see how close these numbers get. This is like 75 right here already. And then you need a 10. That's 85. It's close. Okay. Comparatively, online you can have bigger profit margins because you have less overhead, typically less employees, and it can just run a little bit better from an employee standpoint. So here industry standard is about 70% profit. Okay, that being said, I like, if I go back to brick and mortar, I don't like it to be at 10%. I still believe 10% is too low. So I like to run anywhere between 15 to 25% profit. Okay. This is typically what I like to run it at for a brick and mortar online. This is good. 70%, that's good. I think that's fair. And I would like to run it there. Okay, so just so you guys kind of know, of of where you should be at profit wise, how much you should how much a cash based PT or OT should be making. If I had to throw out a number and if I'm here at 250 a session and we it max is at 62, I would probably offer them anywhere between 50 to 55. I feel like that's fair. 50 to 55 is fair then with additional bonuses so that there isn't any cap that's happening and that you can get them to keep growing without you capping yourself off. But that's for another video that that we can get into. But this is ultimately how you would pay your provider and or yourself if you're thinking wow, how do I pay myself? What is it per hour am I making? This is how you break it down and this is overall the profit that you want to be doing in making. When it comes to online or brick and mortar. Some of you guys might be hybrid. That's okay then. If you're a hybrid, I would still run at 15 to 25% profit margins. That's what I would run at. 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