So you’re thinking about opening your own physio clinic. Maybe you’ve been working as an associate for years and you’re ready to back yourself. Maybe you’ve already got a business name and a logo. Maybe you’re just at the “what would it even take?” stage of thinking.
Wherever you are, the thing I notice most when talking to allied health professionals about clinic ownership is this: the clinical side is rarely the problem. You know your craft. What trips people up is the business architecture behind the clinic – the decisions made (or not made) in the first few months that determine whether the business works or just creates a more expensive job.
This is not a complete guide to how to setup a physiotherapy clinic. That would take a book (I’ve written one of those!). But it covers the fundamentals that matter most, in roughly the order you should be thinking about them.
Start With the Numbers: Gross Profit Per Physio
Before you sign a lease or design a logo, you need to know your numbers. Specifically, you need to know what gross profit you can generate per physiotherapist.
Gross profit is what’s left from revenue after you subtract the direct costs of delivering the service – primarily the cost of the clinician’s time, perhaps the dry-needles and disinfectants, any ultrasound gels, and any specialized consumables your particular type of physio uses.
Everything else (rent, admin, software, marketing) gets paid after that gross profit. If the gross profit per physio isn’t high enough to justify a sale and cover those overheads and leave something for you, the business model doesn’t work, no matter how busy the clinic is.
Here’s a simple way to think about it. If a physio sees eight patients a day at an average fee of $120, that’s $960 in daily revenue. If that physio is on a base wage or contract rate equivalent to $450 per day (including employee costs or contractor margin), your gross profit on that physio is $510 per day, or roughly 53%. That gross profit goes down if you have consumables, and if you pay credit card fees. Anything that is directly linked to the costs of a single appointment affects this gross profit.
Out of that 53%, you need to cover rent, administration, practice management software, consumables, insurance, your own time, and everything else.
That’s a workable margin – but only just, in many locations. The moment you add a second treatment room that sits half-empty, or carry a physio who consistently books at 60% capacity, the maths deteriorates quickly, and you might find yourself in the red quite quickly – and remember – no physio achieves 100% booking rates. 80% is the max I’ve ever seen over a longer period.
Get this calculation right before you commit to anything. And be conservative. Use your worst realistic scenario, not your best. Your best is icing on the cake. But plan for rainy days, because a real business model can handle the bad – not just the good!
Adjust Your Products and Pricing Before You Open
Most physio clinics open with a standard menu of services inherited from wherever the owner trained or worked previously. Initial consult, follow-up, gym session, small-group exercise. Priced somewhere in the middle of the local market.
That’s a reasonable starting point, but it’s worth questioning before you lock it in.
Some services have much higher gross profit margins than others. A 30-minute exercise class with six participants, for example, can generate more gross profit than six individual 30-minute consults – because the physiotherapist’s time is leveraged across multiple clients simultaneously. But I’ve also seen the reverse – one physio had a bike-fit appointment for $600 – nice! But that bike-fit appointment took almost 4 hours. The gross profit wasn’t as nice as you’d think.
Telehealth follow-ups for stable patients can be delivered in 15 minutes and billed similarly to in-person visits, with essentially zero overhead per consult. It’s worth considering adding it to the mix with a small dedicated space.
Conversely, some services look good on the surface but drain margin quietly. Extended manual therapy sessions that run over time. Services requiring expensive equipment with low utilisation. Heavily discounted chronic disease management plans that consume significant clinician hours. And the big killer? Physiotherapy SOAP Notes. Seriously – you need a system to reduce your note-taking time if you want your gross profit to perform.
Before you open, audit every service you plan to offer against its gross profit contribution. Keep the high-margin services, reconsider the low-margin ones, and think about whether you can restructure anything to improve the economics. Pricing your services for gross profit is something most allied health professionals have never been taught formally – and it shows.
This is also the right time to think about your fee positioning. Discount pricing in healthcare rarely attracts the clients you want. It attracts high-volume, price-sensitive clients who are harder to retain, less compliant with treatment, and more likely to leave the moment a cheaper option appears. Pricing at or above the mid-market rate, and then delivering outcomes that justify it, is a better long-term business.
Contractor Model vs Employee Model: Choose Carefully
This is one of the most consequential decisions you’ll make when figuring out how to setup a physiotherapy clinic, and it’s one that most first-time owners make without fully understanding the trade-offs.
The contractor model means your physiotherapists operate as independent contractors, typically on a percentage of revenue (commonly 50/50, 60/40 or 65/35 in favour of the contractor). You get lower financial risk – you only pay them when they generate revenue. But you also get less control. Contractors can set their own hours, work at other clinics simultaneously, and leave with limited notice. You can’t manage their conduct in the same way you can an employee. But it’s a great option for keeping light-weight.
The employee model means you take on all the employment obligations – superannuation, annual leave, sick leave, payroll tax above certain thresholds, and the risk of fixed salary costs even during quiet periods. Even training and performance is your responsibility. But you get control. You can direct their work, enforce standards, require exclusivity, and build a culture. It has a a major downside, and that is a lot of risk and energy expenditure.
Neither model is objectively better. The right answer depends on your stage of business, your cash flow, and the kind of culture you want to build. I’ve seen some amazing contractor models though for business that really want to stay lightweight.
A common approach for new clinics is to start with contractors to reduce early financial risk, then transition key clinicians to employment as the business stabilises and you want more consistency. Just be aware that this transition can be complex, and some contractors won’t want to make it.
Get advice from an employment lawyer before you make this call. The line between a legitimate contractor arrangement and what the ATO considers a disguised employment relationship is narrower than many clinic owners realise, and the consequences of getting it wrong are significant.
How Many Clinicians Do You Actually Need?
It sounds like a simple question. In practice, it requires you to work backwards from your income goals.
Start with what you want the business to generate for you. Factor in all the overhead costs – rent, admin staff, software, insurance, marketing, utilities. Then add your desired owner’s draw or salary. That total is your required gross profit.
Divide your required gross profit by the gross profit per clinician you calculated earlier, and you know how many full-time-equivalent clinicians you need. Round up slightly to allow for holidays, sick days, and ramp-up time for new hires.
Most first-time clinic owners underestimate how much support infrastructure they need relative to the number of clinicians. One full-time reception/admin person can typically support three to four busy clinicians. Beyond that, you either add admin capacity or your clinicians start spending their non-clinical time on administration, which is an expensive use of their skills. So adding a lot of staff actually adds a lot of expenses above and below the line that you may not have thought about.
It’s also worth thinking about the lifestyle implications of your clinic size. A two-physio boutique clinic with low overheads and a clear niche can generate a very comfortable income for its owner with significantly less complexity than a ten-physio multi-room operation. Bigger is not always better. It depends on the business you actually want to run.
I was a physiotherapy CEO for seven years, and I will say this: multi-outlet is hard work. I wished that I went bigger with one outlet, and never went for a second. That’s where the culture issues crept in. All of these things matter.
Choosing Your Space: Start With Square Metres, Not Street Appeal
Once you know how many clinicians you need, you can work out how much space you actually need. This is the right order of operations. Most people do it the other way around – they find a space they like and then try to make the numbers work. That approach leads to either too much space (expensive and demoralising when it’s not full) or too little (constraining your growth ceiling from day one).
There’s nothing worse than having too little or too much. Too little will kill your business growth through lack of momentum. Too big will drain your bank account – not just in rent but in repairs and fitout costs.
A standard physio treatment room needs to be a minimum of around 10 to 12 square metres to function comfortably (think 3m x 4m) – enough for a treatment table, a small desk, and the ability to perform basic movement assessments. If you plan to do exercise rehabilitation like pilates, add a gym/rehab area of at least 40 to 60 square metres depending on the equipment you intend to use. The smallest space I’ve seen work is about a 4-person space of 7m x 4m. That’s 2.2m for the equipment, 1.8m for the cupboards and walking space, and 7m of length to put your equipment.
Add reception, a waiting area, a staff room, and bathroom facilities, and a two-to-three room clinic will typically occupy somewhere between 120 and 200 square metres. 200 is already very large and has a lot of associated costs.
The smallest space I’ve ever seen was about 6m x 3m. That’s only 18 square metres. Just enough for one physio and a waiting area. 3m wide is very tight. Measure your own bedroom to get an idea.
When you’re looking at tenancies, apply that square metreage requirement first. Then consider location (proximity to your target demographic, parking, public transport access), lease terms (length, options to renew, make-good obligations), and total occupancy cost including outgoings.
Make sure your desired location also meets these two requirements:
- Must be wheelchair accessible.
- You can reasonably get large equipment in and out without serious effort.
I’ve made the mistake with point 2 before, and we ended up craning in our equipment (Pilates Reformers for Clinical Pilates). It wasn’t worth it, as we never wanted to maintain and upgrade our equipment.
Pay particular attention to the make-good clause. This is the lease provision that requires you to restore the premises to its original condition at the end of your lease. In a fitted-out clinic with partitions, flooring, plumbing for a gym shower, and built-in cabinetry, a make-good obligation can cost tens of thousands of dollars. Negotiate this carefully before you sign. Most landlords will be okay with you leaving the new partition walls when you leave – but only if you make it clear before you sign.
The Australian Physiotherapy Association’s practice resources include guidance on facility standards and infection control requirements worth reviewing before you finalise any space.
Oh – and make sure you check with your local council that you can run a clinic at this location before you sign on the dotted line.
How to Setup a Physiotherapy Clinic Fit-Out: Designer or DIY Procurement?
Once you have a space, you need to fit it out. You have two main approaches.
Option one: engage an interior designer or shopfitter who specialises in healthcare or commercial fit-outs. They manage the whole project – design, council approvals if required, trades coordination, and handover. This is faster, less stressful, and produces a more cohesive result. It costs more. For a small-to-medium clinic, expect a fitted-out cost in the range of $80,000 to $200,000 depending on finishes, location, and the scope of work.
Option two: self-manage the subcontractors. You engage a flooring contractor, a painter, a partition installer, an electrician, and a plumber separately and coordinate the project yourself. You’ll save 15 to 45% compared to a full fit-out quote from a shopfitter, but you’ll spend significant time managing the project, and sequencing trades is harder than it looks. One trade running late cascades into delays for every trade that follows.
This is the approach I’ve always done, but only because I’m also a registered Architect and enjoy painting myself!
For most first-time clinic owners, option one is worth the cost premium – particularly for the trades coordination. I once watched a business rent a premises and leave it empty for 9 months while they figured out how to fit it out. That’s a lot of rent.
Where self-management makes sense is in clearly defined components: sourcing your own furniture, specifying finishes directly with suppliers, or managing the artwork and signage yourself after the structural work is complete.
Also, you’ll need to get physio-specific equipment like reformers, treatment tables, needle bins, etc.
Order Long-Lead Equipment and Furniture Early
This catches almost everyone off guard the first time.
Treatment tables, gym equipment, reception counters, cabinetry, and any custom-built furniture all have lead times that are typically longer than you expect – anywhere from four to twelve weeks for standard items, and longer for anything custom or imported. If you wait until the walls are up and the paint is dry to start ordering, you’ll be sitting in an empty clinic for weeks waiting for a delivery.
If you buy from Alibaba, expect your equipment to take 4 months at least. But the cost savings of a huge bulk order direct from Alibaba are usually worth it.
As soon as your lease is signed and your floor plan is confirmed, start ordering. Prioritise anything with a lead time over four weeks. Plinths, gym flooring, custom joinery, and any specialised equipment (shockwave machines, ultrasound units, TENS equipment) should be on order before the fit-out begins, not after.
The same applies to any equipment requiring installation – HICAPS terminals, exercise bikes with power requirements, or wall-mounted screens in treatment rooms. Your electrician needs to know about these before rough-in, not after.
Get Your Payment System and Internet Sorted Early
Two things that seem administrative but have the power to derail your opening week: payment infrastructure and internet connectivity.
HICAPS (the health fund claiming system used in Australian clinics) requires an application, approval, and hardware setup that can take three to four weeks. Apply as soon as your business is registered and your Medicare provider number is active. Don’t leave this until the week before you open.
Your internet connection matters more than most clinic owners account for. Practice management software (whether you’re using Cliniko, or another platform), HICAPS terminals, digital intake forms, and any telehealth capability all depend on a reliable, fast connection. A standard NBN residential connection is often not sufficient for a multi-user clinical environment, especially if you’re running video consultations simultaneously. Look at a business-grade connection with a service level agreement, or at minimum a 4G/5G failover option for when the fixed line drops.
Quick tip: it’s not about the download speed. As a business, you need a fast upload speed (at least 50mbps). This allows you to upload documents, videos, and stream web-calls at a reasonable scale.
The cost difference between a reliable commercial internet setup and a standard residential connection is modest. The cost of a busy clinic grinding to a halt because the payment system is offline is not. DO NOT use a residential wifi router. Make sure it’s business grade, and you’ll have a lot less issues.
This Is Just the Beginning
If this article has done its job, you now have a clearer picture of the key decisions involved in how to setup a physiotherapy clinic – and a sense of how much is involved before you see a single patient.
But this is genuinely just the surface. There’s business registration, Medicare and health fund credentialing, public liability and professional indemnity insurance, workplace health and safety compliance, infection control policy, staff contracts or contractor agreements, a practice management system, an accounting and payroll setup, a website, and an actual patient acquisition strategy to think about before the doors open.
The clinic owners I’ve seen set up well all have one thing in common: they got professional advice early. An accountant who works with allied health businesses, a lawyer who understands healthcare employment, and a business advisor or mentor who can help you stress-test your financial model and actual plan before you commit to a lease.
The cost of that advice is small relative to the cost of getting any one of these decisions wrong. Don’t skip it.
Need help thinking through the business model behind your clinic before you commit to a space? Start with your numbers, get clear on your model, and build from there. Book a discovery call with me.