Make yourself an efficiency expert

Chiropractic is a business, and as with every business, the final tally should be profit and accumulation of wealth.

Saving money was the furthest thing from my mind as a chiropractic student, since I was inundated with debt. Student and personal loans took almost all my money, and I used what was left to survive day to day. When a financial adviser recommended I save for retirement, my initial reaction was, “Where would this money come from?” It wasn’t until he laid it out quite simply that it made sense. Money generated from my practice, after overhead expenses, was to be used to save for taxes and retirement. The rest was for personal use. Although this concept seems straightforward, you would be surprised at how many doctors are either delinquent with tax payments or never place a dime into a retirement account. But, they always found it quite easy to max out credit cards or purchase the toy du jour, whether it was expensive cars, jewelry, or whatever. We should be rewarded for our hard work, and personal wealth used within a budget is acceptable. But excessive spending without thought to growing debt is foolish.

It is imperative to outline your financial goals, have action steps in place, stick to the plan, and, as the practice grows, begin to profit and accumulate your wealth.

Accumulating Income
Three areas generate income within a chiropractic office: services, patient volume, and fees. A few variations on this theme may occur, but generally, these three areas cover it all. Sound practice-management procedures offer diverse services to increase revenue. Marketing and referral concepts increase volume, patient management maintains patient volume, and proper fees help create a successful and profitable clinic. It’s as simple and complicated as that. Considering the mind-set of many chiropractors, asking them to increase their fees or introduce therapy or nutrition, and worse yet, to advertise or verbally ask for a referral, is often too much to ask. But consider the numbers. If you increase any of these three components, your income will expand exponentially.

Increased Services
Take time to review current procedural terminology (CPT) codes of the insurance industry. Many of our treatment and examination services are covered. More often than not, the average chiropractor is either undercoding, or worse yet, not coding for many services rendered. I encourage you to seek help if your services are not being billed correctly. Several commercial coding books and seminars are available. Check with your state associations for their coding seminars. If no program is offered, the American Chiropractic Association annually updates its Chiropractic Coding Solutions Manual and CD, which you can purchase by visiting www.acatoday.com. Requesting a legitimate fee from either an insurance carrier or the patient is crucial if you plan to profit and accumulate wealth from your labor.

Examination and management codes are often paid depending on the time taken to diagnose or treat a patient. I recommend that you review time spent and procedures used for each patient. Has the payment per time spent on most patients been within reason, or would a cost analysis prove that your profit per patient has been negligible at best? Are you too conservative or not requesting additional services, such as therapy, examination, or x-ray, when they can be legitimately helpful? Would counseling and charging for nutrition or rehabilitative services be useful and profitable? Do you regularly recommend pillows, orthotics, and other biomechanical supports? Have you augmented your diagnostic procedures with specialized instrumentation? Are you providing knee-to-knee time offering both work and at-home adjusted daily living or work hardening advice? These all have appropriate codes for the time spent managing your patients’ care. Even if these services are not reimbursable, it will be useful to stimulate awareness and create a cooperative, compliant, and referring patient.

Increased Fees
How did you arrive at your fees? A number of doctors suffer from a fee gag reflex. This phenomenon is easy to diagnose. It’s when the doctor decides on a fee by gagging on the number just prior to asking the patient to pay. Rejection is a huge motivator for the doctor to charge less, and the line is often drawn just prior to choking out your fee. This fee gag reflex is unacceptable and unprofessional. Charging less than the usual and customary fees will not endear you within your community, but will, assuredly, create less wealth for you. To the doctor who feels that someone cannot place a fee on the value of an adjustment, I ask that they also request their creditors to not place a fee as well. Responsible fees can be requested in an ethical manner based upon the customary and reasonable fees of chiropractors in the area. Call around and determine if your fees are too low. Ask insurance providers the fees of a number of codes, and you may be surprised to find out that your fees are too low. Change your fees to be reflective of your area.

Increased Patient Visits
Of the three components that generate income in a chiropractic office, increased patient volume or visits is the most difficult to accomplish. It may require patient rejection of your recommendations, but more often, sound patient and practice management—as well as public relations and marketing—bolster this important area of practice success. Mapping out a schedule for return visits, along with the proper management of their care, is crucial for profitability. The successful practice has patients following their schedules and supporting or maintaining their care throughout the years. Various methods of reporting patient findings have been tried, but the best method is to tell the truth and explain clearly the role of chiropractic. People are receptive of recommendations based on value and reality. Make it real, whether in written, verbal, technical, or classroom settings. Train your staff to follow the patients throughout their schedule to augment their knowledge and to plant referral seeds that sprout more awareness and new patients when nurtured.

Reining in Overhead
Probably the single reason that profits are usually lower than expected is a large overhead—the cost of doing business. When I receive an email question from a doctor wishing to purchase a practice, my first reply to the prospective buyer is to determine the financial health of the practice he or she wishes to purchase. How does the yearly gross income compare to their take-home pay? How has the seller acquired new patients? Is it from a large advertising budget that, if it stopped, would also stop the flow and growth of the practice? How many staff members are on board, and are their responsibilities overlapping? Is the practice rich in equipment and diagnostic services but poor in reimbursement or usage? Are practice procedures used effectively, or are reams of written pamphlets and other means of communication silenced in a corner of a closet? How much debt is being acquired, and how best can the new doctor rein in this monster overhead and work more efficiently and profitably? Marvel not at the doctor with the largest numbers, but marvel more at the doctor with less numbers but more profit. If they choose, they can expand their numbers and accumulate even more profit. The solution is efficiency, and efficiency means streamlining office operation.

I recommend that you objectively consider yourself an efficiency expert hired to downsize your practice for profitability. Where would you start? As written above, there are many areas to consider, but none are more important than staff. In addition to salary, taxes, and benefits, overlapping staff may stifle growth rather than help it grow. Staff members play a useful role when their assignments are coordinated between themselves, and internal marketing and external public relations are delegated. Staff with too much time on their hands provides less production with more obstruction. Clear, responsible assignments with set goals work best. Staff education and timely meetings help to increase motivation and help them meet goals.

Proper coding, use of equipment, and patient compliance with sound referral programs keep your practice numbers within a healthy level. Anything less is a drain on the bottom line, adds to overhead, and lowers profit. Review all areas of practice procedure, and streamline accordingly.

Joel E. Margolies, DC, has been in practice for 25 years in Atlanta and is the author of four books: Smart Start, Workshop Workbook, Chiropractic Marketing and Public Relations, and Personal Injury Workbook. He sends a free weekly chiropractic e-newsletter concerning practice management, public relations, and philosophy to more than 10,000 DCs in 31 countries. Margolies can be reached via email: joel3639@aol.com, or Web site: www.chirosmart.net.