Last Updated: December 2025
Physiotherapy practice profitability comes down to a simple equation: practitioner productivity multiplied by fee per service, minus costs. Your financial systems must track how effectively each practitioner's time converts to revenue, where revenue leaks through unbilled services or poor claiming, and whether your cost structure supports sustainable margins.
Allied health practices operate on tight margins. Small improvements in utilisation or claiming success compound into significant profit gains. A 5 percent improvement in billable utilisation for a four-physio practice could add $30,000 to $50,000 annually to the bottom line. Yet without measurement, you cannot identify or capture these opportunities.
Physiotherapy clinics generate revenue primarily through patient consultations, with funding from private fees, private health insurance, Medicare (through CDM plans and compensable schemes), DVA, workers compensation, and motor vehicle accident schemes.
Each funding source has different fee schedules, claiming requirements, and payment timelines. Managing this complexity while maximising revenue requires robust systems.
The core economics are straightforward: each practitioner has available clinical hours, and profitability depends on what percentage of those hours generate revenue and at what fee level.
Revenue categories:
Direct costs:
Operating expenses:
Revenue per practitioner:
This is your most important metric. Calculate total clinical revenue divided by practitioner FTE. Australian benchmarks suggest $180,000 to $280,000 per FTE annually for established practices.
Break this down further: revenue per available hour (target $120 to $180) and utilisation rate (billable hours as percentage of available hours, target 75 to 85 percent).
Revenue mix:
Understand what percentage comes from each funding source. Heavy reliance on any single source creates risk. Medicare EPC revenue is capped per patient, so growth requires private and health fund patients.
Cost of service delivery:
Practitioner costs (wages, super, locums) as percentage of clinical revenue. Target 35 to 45 percent. Higher suggests either wages are too high relative to fees or utilisation is too low.
Operating expenses:
Reception and admin costs should be 8 to 12 percent of revenue. Rent should be 6 to 10 percent. Total overhead at 25 to 35 percent of revenue is typical.
Net profit:
Target 15 to 25 percent net margin for owner-operated practices. Employed-manager practices typically show 10 to 15 percent after management costs.
Your practice management software is the foundation. Cliniko, Nookal, or similar platforms handle bookings, clinical notes, billing, and claiming. Ensure tight integration with accounting:
Private and health fund:
Process health fund claims immediately after appointments. Collect gaps at time of service where possible. Follow up outstanding gaps within 7 days.
Medicare (EPC):
Track patient allocation of Medicare-funded sessions (currently 5 per calendar year). Bill correctly using appropriate item numbers. Monitor for rejected claims.
DVA:
Bill at scheduled fee rates. Ensure correct card validation. Process claims daily for fastest payment.
Workers compensation:
Obtain insurer approval before treatment. Bill according to fee schedules. Track approvals and remaining sessions.
Weekly:
Monthly:
Practice management: Cliniko from $49 monthly per practitioner or Nookal from $55 monthly per practitioner. Both handle bookings, clinical notes, billing, and health fund claiming.
Accounting: Xero Business at $78 monthly. Integrates with major PMS platforms.
Online bookings: Usually included in PMS or add-on. Essential for patient convenience and reducing reception workload.
Example costs for 4-practitioner clinic:
What revenue per practitioner should we target?
Established practitioners should generate $200,000 to $280,000 annually in clinical revenue. New practitioners may take 12 to 18 months to reach full productivity, starting at 40 to 50 percent of target and building to 80 percent or higher.
How do we improve practitioner utilisation?
Track utilisation weekly by practitioner. Investigate low performers. Common causes include poor rebooking, excessive DNAs, scheduling inefficiency, or inadequate marketing driving new patients. Address root causes rather than symptoms.
Should we charge gaps on health fund patients?
Yes. Health fund rebates rarely cover full commercial fees. Set your fee based on your costs and value, claim the rebate, and collect the gap. Practices that bulk-bill health funds often struggle with profitability.
How do we reduce DNA rates?
Send appointment reminders (SMS 24 hours before is most effective). Implement cancellation policies with fees for late cancellations. Track DNAs by practitioner and time slot to identify patterns.
What is a healthy wages-to-revenue ratio for practitioners?
Practitioner employment costs (salary plus super) at 35 to 45 percent of their generated revenue is sustainable. Above 50 percent suggests either the practitioner is underperforming or you need to review fee levels.
Scale Suite provides financial management services tailored to Australian physiotherapy practices. We understand the complexity of multiple funding sources, health fund claiming, and practitioner productivity metrics.
Our team handles practice accounting, payroll, revenue reconciliation, and monthly reporting. We provide the dashboards and analysis that help you identify opportunities to improve productivity and profitability.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses. Our Sydney-based team integrates with your daily operations, working like part of your internal staff but with senior-level expertise.
Disclaimer: This guide provides general information only and does not constitute tax, legal, or financial advice. Medicare billing rules, health fund arrangements, and employment matters require professional advice specific to your circumstances.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
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