Physical therapy billable units rarely equal scheduled hours. Everhour reports help compare logged time, cost, and revenue.
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This calculation answers the rate a self-employed physical therapist needs to charge per billable hour to cover target income, ordinary business expenses, self-funded benefits, and tax reserves. The number is a pricing floor, not a guarantee that every payer or patient will accept it. It helps you compare cash-pay work, contract clinic work, home visits, and advisory projects on the same basis.
BLS reports 2024 median pay of $48.57 per hour, or $101,020 per year, for employed physical therapists under SOC 29-1123. That benchmark does not include self-employed physical therapists in OEWS wage estimates. Independent pricing must carry costs an employee wage does not show, including licensing, insurance, documentation time, billing administration, continuing education, unpaid gaps, and taxes.
Use this formula: `(target income + overhead + benefits substitute + tax reserve) / billable hours`. Target income is the personal compensation goal. Overhead includes ordinary and necessary business expenses such as license renewals, liability coverage, supplies, software, billing help, and travel costs that are not reimbursed. The benefits substitute covers health insurance, retirement contributions, paid time off, and other employee benefits you fund yourself.
For example, a physical therapist targeting $104,000 in income, $26,000 in overhead, $18,000 for self-funded benefits, and $30,200 for tax reserves needs $178,200 in annual collections. If 1,350 hours are realistically billable after documentation, cancellations, scheduling, payer follow-up, and administration, the required rate is $132.00 per billable hour.
Medicare outpatient therapy timed codes use direct one-on-one treatment minutes, not the full appointment block. CMS counts 1 unit at 8-22 timed minutes, 2 units at 23-37 timed minutes, and 3 units at 38-52 timed minutes. Fewer than 8 timed minutes are not billable as a timed unit. Waiting, independent activity, supervision, and separate documentation time do not count as billable timed treatment minutes.
A 60-minute slot rarely equals 60 billable timed minutes. A visit with 40 direct timed minutes and 15 minutes of documentation still produces 3 timed units, while the documentation time remains part of your workload. Your denominator should reflect hours that produce billable payer units or client charges, rather than every hour spent inside the clinic day.
A U.S. sole proprietor or independent contractor generally reports business profit or loss on Schedule C and uses Schedule SE for Social Security and Medicare taxes on self-employment income. For 2026 estimated self-employment tax, net earnings are multiplied by 92.35%; Social Security tax is 12.4% up to the $184,500 wage base, and Medicare tax is 2.9%.
Additional Medicare Tax applies at 0.9% to combined Medicare wages and self-employment income above $200,000 for single filers and $250,000 for married filing jointly. Quarterly estimated taxes matter because contractor pay has no employer withholding for income tax, Social Security, or Medicare. A rate that ignores this reserve turns a profitable schedule on paper into a cash-flow problem at tax time.
A one-off calculation is enough when you need a quick floor for a new contract, a cash-pay visit, or a comparison against an employed offer. Recalculate when your billable hours, tax reserve, payer mix, or overhead changes. The result loses accuracy when the same rate covers evaluation, treatment, documentation, travel, and admin without separating billable from non-billable work.
A managed workflow becomes necessary when multiple clinicians, clients, payers, or projects share the same week. Everhour Reporting can group logged time by project, client, member, task, date range, and financial columns, then export CSV, Excel/XLSX, or PDF reports. That gives a practice owner a durable view of billable time, non-billable time, labor cost, revenue, and margin.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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Use realistic billable hours, not total working hours. Exclude documentation, billing follow-up, scheduling, marketing, continuing education, unpaid travel, cancellations that cannot be charged, and administrative time unless your contract or payer arrangement pays for them. For Medicare outpatient timed services, direct one-on-one treatment minutes drive timed units, so appointment length alone is the wrong denominator.
No. BLS reported 2024 median pay of $48.57 per hour for employed physical therapists, and OEWS wage estimates exclude self-employed physical therapists. Treat that wage as an employee benchmark. Independent rates must add business overhead, self-funded benefits, tax reserves, unpaid administration, and the reduced number of hours that actually produce revenue.
Separate documentation time is not billable timed treatment time for Medicare outpatient therapy timed codes. CMS counts timed therapy minutes only while the qualified professional or auxiliary personnel directly treats the patient. Documentation still belongs in your pricing model because it consumes work time, even when it does not create additional billable units.
Include ordinary and necessary business expenses, self-funded benefits, and tax reserves before dividing by billable hours. Common PT-specific costs include state license renewal, liability insurance, continuing education, documentation systems, scheduling or billing tools, supplies, travel costs, and unpaid administrative time. Keep reimbursable patient supplies or pass-through expenses separate when your pricing agreement treats them separately.
Yes. For 2026 estimated self-employment tax, net self-employment earnings are multiplied by 92.35%; the result is subject to 12.4% Social Security up to the $184,500 wage base and 2.9% Medicare. Additional Medicare Tax applies above the filing-status thresholds. Build the tax reserve into the rate before dividing by billable hours.
Everhour Reporting provides customizable reports with 45+ columns, grouping, filters, exports, and scheduled email delivery. A practice owner can review billable time, non-billable time, labor costs, revenue, profit, invoice status, and budget metrics by clinician, client, project, or task.
Turn a rate check into weekly operating data. Everhour Reporting shows billable time, non-billable time, costs, revenue, and margins, giving PT practices clearer pricing decisions.
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