Over the years we’ve worked with many chiropractors who have asked us to help them make a living through chiropractic. These doctors have come to us from a number of different backgrounds.
Some of them sought us out because they were opening their doors for the first time. They wanted to do it right and avoid costly mistakes. Others arrived at our meetings desperate for advice because they were on the verge of closing their doors and seeking another career. There were some who came to us with solid practices, but had hit a plateau and couldn’t move past their current level of collections despite repeated efforts to do so. And yet others were doing well and growing, but needed advice on expanding and hiring associates.
“These doctors were all aware that they were lacking certain chiropractic business principles and were willing to do whatever it took to learn and achieve their desired outcomes.”
However, there are also chiropractors who come to us, and then try to convince us that they really don’t need our help! We love talking to doctors who are doing well (and wish there were more of them) but it’s a little disconcerting when a doctor calls us for help, and then proceeds to tell us how well they’re doing.
Even before these doctors give us their stats, nine times out of ten we already know what to expect. They usually have a high volume practice with impressive collections. But, their overhead is so high that at the end of them month, they have little to no profit and are on the cusp of burnout. They think they’ve got a successful practice because they see such a large number of patients, but deep-down they know something isn’t right because despite those high numbers, they’re unbelievably stressed.
We’ll hear a chiropractor boast that they’re producing $60,000 or more a month. However, after we look at their situation and see that their overhead is $55,000 or more a month, we try to help them understand that it’s not about collections, it’s about profitability. It’s about working smarter, not harder.
We recently worked with a doctor who was doing a lot of insurance and personal injury business. He was proud to report to us that he was collecting an average of $97 per patient visit. That’s an extremely high average! However, we looked at his stats and found that each visit was costing him an astounding $89. His profitability was really only $8 per visit!
Compare that to another doctor we’ve been working with who averages collections of $40 per visit. However, his overhead is $14 per visit, so he makes $26 profit per visit. Which doctor is working harder and which doctor is working smarter (and making more money?) Profitability comes down to what you’re really making after overhead is figured in. Don’t confuse motion with progress.
There are many variables that make a chiropractic office successful. There are so many things the doctor has to do well. It’s frustrating when we see them get most of it right, but allow poor financial decisions to sabotage their success.
We’ve also noticed a disturbing trend: the more money that doctors collect, the more they allow their overhead to increase. Why do they do that?
“Common sense: a practice that’s producing $35,000 a month with a $15,000 overhead is much more profitable than a practice that is producing $60,000 a month with a $55,000 overhead.”
Yet what we often see chiropractors do when they begin to make a little money is to start buying new gadgets. They buy new cars, new houses, and new equipment. As a result, instead of looking at their net worth, they now have to look at how they can afford to make those new payments.
For some reason, there are many people who think like this: “I can’t necessarily afford that car, but I can certainly afford that payment.” This type of thinking starts adding to overhead and will eventually turn into a debt nightmare. The best way to deal with a problem is to never have one in the first place. Understanding basic business principles would solve the aforementioned problem before it happens.
The worst thing about making financial mistakes is usually not the mistake itself, it is the consequences of that mistake. Unfortunately, hard work is not enough to undo past financial blunders. You’ve got to know how to work hard and smart!
“Seeing high numbers of patient visits doesn’t mean your practice is effective or efficient. And, it doesn’t mean that your profit is as high as it should be! Do the math. Take a look at your collections and overhead. It might explain where your stress is coming from.”
Learning how to work hard and smart will require you to change some things. Decide today that you’re going to take action and change your situation. What’s the definition of insanity? Doing the same thing over and over and expecting a different result. Today is the day to learn how to do it differently!
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