Launch Plan for Occupational Therapy
Follow 7 practical steps to create a business plan with a 5-part service strategy, breakeven at 2 months, and funding needs covering $185,000 in CAPEX and a minimum cash requirement of $836,000 clearly explained in numbers
7 Steps to Launch Occupational Therapy
| # | Step Name | Launch Phase | Key Focus | Main Output/Deliverable |
|---|---|---|---|---|
| 1 | Define Service Mix & Pricing | Validation | Model revenue across services ($100–$200 range) | Service pricing structure defined |
| 2 | Calculate Initial Capital Needs | Funding & Setup | Finalize $185k CAPEX; prioritize build-out | CAPEX budget approved |
| 3 | Establish Operating Cost Structure | Funding & Setup | Lock in $9.9k fixed costs; reduce rent/EHR | Operating expense baseline set |
| 4 | Build the Staffing Plan | Hiring | Hire 70 FTE clinical/support staff for 2026 | Staffing roster completed |
| 5 | Project Revenue and Utilization | Launch & Optimization | Forecast $77.7k/month based on 600% utilization | Year 1 revenue projection |
| 6 | Determine Breakeven and Payback | Funding & Setup | Confirm Feb-26 breakeven; plan 18-month payback | Financing plan finalized |
| 7 | Optimize Variable Costs | Optimization | Target 115% variable ratio; cut billing/supplies | Variable cost reduction targets set |
Occupational Therapy Financial Model
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What is the specific patient demand for specialized Occupational Therapy services in my target area?
The highest immediate volume and reimbursement for your Occupational Therapy practice will depend heavily on local payer mix and referral networks, but specialization in Hand Therapy often yields higher procedural rates, while Pediatric services can provide more consistent, recurring volume.
Volume Drivers by Specialization
- Pediatric demand offers steady, long-term scheduling, supporting high practitioner utilization rates.
- Geriatric volume is often high post-acute discharge but can be irregular based on insurance authorizations.
- High volume doesn't always mean high margin; check the payer mix for each age group.
- If your capacity model relies on 90% utilization, you need predictable daily bookings across all specialties.
Reimbursement Levers
- Hand Therapy typically commands higher reimbursement per session due to specialized training and complexity.
- Geriatric services, heavily reliant on Medicare, often have lower base rates than private pay or commercial insurance.
- Track your Average Revenue Per Treatment (ARPT) by service line to see which specialization truly maximizes your fee-for-service model.
- If onboarding takes 14+ days, churn risk rises, so watch how quickly new referrals convert; also, review Are Your Operational Costs For Occupational Therapy Business Staying Within Budget? to see defintely where margins are tightest.
How quickly can we secure insurance contracts to ensure stable revenue and cash flow?
Securing payer contracts quickly is essential because your 115% variable cost structure means you are immediately cash-negative on every service delivered until reimbursement arrives, so you must map out your working capital needs now; you can review operational cost concerns here: Are Your Operational Costs For Occupational Therapy Business Staying Within Budget?
Cash Burn vs. Lag Time
- Variable costs at 115% mean you lose 15 cents on every dollar of service revenue collected upfront.
- This deficit must be covered by working capital until the payer pays you.
- If the average reimbursement lag is 75 days, you need enough cash to cover 75 days of payroll and supplies defintely.
- Focus on minimizing therapist idle time to reduce the cash burn rate immediately.
Contract Velocity Targets
- Aim to have 70% of your expected patient volume covered by in-network contracts within 90 days.
- Credentialing timelines often take 60 to 120 days per major payer; plan for the long end.
- Track Days Sales Outstanding (DSO) for each new payer contract separately.
- If a payer takes over 90 days to pay the first claim, treat them as self-pay until proven otherwise.
What is the realistic capacity utilization rate for new therapists in the first 12 months?
A 600% utilization rate projection for 2026 is not a standard measure of therapist efficiency, and achieving any high utilization in the first 12 months is tough due to ramp-up time; realistic utilization for new Occupational Therapy providers typically starts between 40% and 55% as they build caseloads. Before worrying about 2026 targets, you need a clear handle on current spending, so review Are Your Operational Costs For Occupational Therapy Business Staying Within Budget?
New Hire Ramp-Up Reality
- New therapists need 3 to 6 months to reach 60% utilization.
- Referral flow dictates initial volume, not just therapist availability.
- If onboarding takes 14+ days, churn risk rises defintely.
- Target 50% utilization by month 9 for a healthy start.
Analyzing the 600% Goal
- 600% utilization is likely a growth factor, not a standard efficiency metric.
- With 7 therapists, 100% utilization yields 7 FTE capacity.
- If 600% means 6X growth on Year 1 revenue, model that specific target.
- Focus on securing high-value payer contracts now.
What is the total funding required to cover the $185,000 CAPEX plus the $836,000 minimum cash need?
The total capital required for the Occupational Therapy business is $1,011,000, combining the initial setup costs and the required operating cushion until payback. Structuring this mix correctly—balancing debt against equity—is critical to managing the 18-month runway needed for operational maturity, which is why understanding your client engagement growth rate is so important; check out What Is The Current Growth Rate Of Client Engagement For Your Occupational Therapy Business?
Total Capital Stack Breakdown
- Total funding needed is $1,011,000 ($185k CAPEX + $836k cash).
- The $185,000 CAPEX covers necessary physical assets and initial tech setup.
- The $836,000 minimum cash need must cover the operating deficit for 18 months.
- You need to know your burn rate precisely; defintely don't guess on that runway number.
Structuring the 18-Month Runway
- Use equity to finance the high-risk, non-collateralized working capital burn.
- Debt, like an SBA loan, is better suited for financing the tangible $185,000 CAPEX.
- Debt service payments must stay low enough so they don't consume contribution margin too early.
- If utilization lags, that 18-month cash buffer shrinks fast, increasing equity dilution risk.
Occupational Therapy Business Plan
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Key Takeaways
- The initial financial requirement for launching the Occupational Therapy practice includes $185,000 in Capital Expenditure (CAPEX) plus a minimum operating cash need of $836,000.
- Driven by high average treatment prices ranging from $100 to $200, the clinic is modeled to achieve financial breakeven rapidly, specifically within just two months (February 2026).
- Successful scaling relies on maximizing therapist efficiency, targeting a utilization rate that begins at 600% in the first year of operation in 2026.
- The long-term financial outlook is strong, with the 5-year EBITDA projection expected to reach $3052 million by the year 2030.
Step 1 : Define Service Mix & Pricing
Define Service Pricing
Modeling revenue starts with defining what you sell and for how much. You must structure your five core services with clear price points for 2026 projections. We need prices set between $100 for Group Programs and $200 for Hand Therapy sessions. This range directly dictates your average revenue per visit (ARPV) when calculating potential monthly revenue based on therapist capacity.
This step is foundational because your utilization rate (Step 5) is meaningless without a defined price per unit of service. Since you bill fee-for-service, every dollar captured depends on this pricing map. It’s defintely better to set conservative prices now than over-promise revenue later.
Map Prices to Service Value
Allocate specific dollar values across the five services within the $100 to $200 spectrum. Higher-cost services, like Hand Therapy at $200, usually require more specialized therapist time or materials. Lower-cost services, like Group Programs at $100, rely on higher volume to drive significant revenue.
To execute this, assign a projected volume mix. If 60% of sessions are standard one-on-one care priced at $150, that sets your baseline ATV. The mix determines if you hit the Year 1 target of $77,760 monthly revenue, even before considering the 600% capacity utilization assumption.
Step 2 : Calculate Initial Capital Needs
Locking Down CAPEX
You must lock down your Capital Expenditures (CAPEX) budget now. This spending funds the physical mechanism for delivering therapy services. For this practice, the total required investment sits at $185,000. If you delay this commitment, your licensed therapists can't treat patients effectively upon opening. The two largest immediate drains are the physical space and the necessary tools.
You must secure the $75,000 earmarked for the clinic build-out; that’s where care happens. Also, plan to spend $40,000 on specialized equipment purchases. Missing these targets pushes back your launch date, which is defintely not what we want. Get these capital items budgeted and sourced by Q2 2026, no exceptions.
Prioritizing Physical Assets
Focus procurement efforts immediately on the clinic build-out. That $75,000 involves leasehold improvements that require lead time. Get vendor bids locked down by the end of Q4 2025 to stay on track. For the $40,000 in specialized gear, check if leasing reduces the upfront cash drain on your $185,000 total budget.
If the build-out runs over budget, you must have a plan to pull funds directly from the general equipment line item. This flexibility is vital to hitting the Q2 2026 operational date. Don't let small overruns impact core asset acquisition.
Step 3 : Establish Operating Cost Structure
Fixing the Baseline Burn
You must secure your baseline burn rate now. Locking in $9,900 in monthly fixed operating expenses sets the floor for profitability. This figure dictates how many appointments you need just to cover overhead before payroll hits. It’s the critical baseline before scaling staff in Step 4.
Getting this wrong means you start hiring based on flawed assumptions. Since revenue modeling (Step 5) depends on utilization, fixed costs must be firm. If your rent is too high, utilization targets become unreachable quickly, anyway.
Attack High Fixed Line Items
Focus intensely on the two largest fixed drains immediately. The $5,000 clinic rent is your biggest target; explore shared space agreements or smaller initial footprints. If you can shave $1,000 off rent, that’s immediate, permanent margin improvement.
Next, review the $1,000 monthly Electronic Health Record (EHR) cost. Can you negotiate a lower tier or find a provider offering better value for your initial 30 therapists? Don't pay for capacity you won't use in Q1 2026. You should defintely push hard here.
Step 4 : Build the Staffing Plan
Staffing the Launch
Getting the initial team right dictates service delivery speed for your launch in 2026. You need 100 full-time equivalents (FTE) ready to operate. This includes 30 licensed Occupational Therapists who directly generate service revenue. This headcount scale is essential to support your unique value proposition of reducing wait times through operational excellence. Poor onboarding or hiring delays here will crush early utilization targets.
Hiring Priorities
Focus hiring cadence on clinical roles first; OTs are the revenue engine. Managing 100 staff against fixed overhead of $9,900 per month requires tight control, especially when Year 1 revenue averages only $77,760 monthly. Ensure the 30 OTs are fully onboarded before you expect to hit the projected 600% capacity utilization. Defintely sequence administrative hires to support billing efficiency immediately.
Step 5 : Project Revenue and Utilization
Revenue Baseline
Forecasting revenue based on utilization is the core driver for cash flow planning. This step validates if your staffing plan supports your operational goals. If utilization assumptions are off, your capital needs change fast. You've got to nail this before scaling marketing spend.
We project Year 1 average monthly revenue hitting $77,760. This forecast relies on a conservative 600% capacity utilization rate applied across the initial 7 therapists. This number sets the baseline for covering fixed overhead quickly.
Hitting Utilization
To achieve $77,760 monthly, you must manage appointment density tightly. Given the $100 to $200 service mix, this utilization implies a high volume of billable hours per therapist monthly. Don't mistake capacity for actual booked time.
If therapist onboarding takes longer than planned, utilization drops. Keep a close eye on the 2-month breakeven target (Feb-26). Any slippage here strains the $185,000 initial capital requirement; you need to defintely monitor patient flow from day one.
Step 6 : Determine Breakeven and Payback
Breakeven Timing
Hitting breakeven quickly validates the operatonal model, but payback dictates total capital required. You need financing to bridge the gap between initial outlay and cumulative profit recovery. If breakeven hits in February 2026, funding must cover needs until the 18-month payback target is achieved. This runway management is crucial for survival.
The 2-month breakeven confirms efficiency, but founders must secure enough cash to survive until the 18-month payback mark. That means covering all fixed costs and the initial $185,000 capital expenditure until cumulative earnings turn positive for the second time.
Funding Runway Check
Plan financing to cover the initial $185,000 CAPEX plus the negative cash flow until February 2026. With fixed costs at $9,900/month and projected Year 1 revenue averaging $77,760/month, the contribution margin must absorb the fixed costs fast. Ensure your cash buffer lasts well past the breakeven point to hit the 18-month payback goal.
Step 7 : Optimize Variable Costs
Focus Variable Spend
Your initial variable cost ratio sits at 115%, which means costs exceed revenue per service delivered defintely. This ratio must drop fast to achieve profitability, especially since revenue relies purely on billable treatments. Controlling these costs directly impacts your gross margin and cash flow stability. You need immediate action on the largest spend areas to reverse this trend.
Negotiate Billing Fees
Target the 50% component: Medical Billing. Since you bill for every service, high billing overhead eats margin. Negotiate transaction rates down immediately. Also, focus on the 20% chunk: Therapeutic Supplies. Standardize purchasing and look for bulk discounts over the first year. If you cut 5 points from billing and 3 from supplies, you start moving toward a sustainable margin.
Occupational Therapy Investment Pitch Deck
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Frequently Asked Questions
The initial capital expenditure (CAPEX) is approximately $185,000, covering major items like $75,000 for build-out and $40,000 for specialized equipment This does not include working capital, which must cover the first two months until breakeven;