Chiropractic Management — Do you know which part of your chiropractic business provides the roadmap for success? If not, then watch this video by AMC’s President, Tom Owen, as he walks you through strategies you can implement today.
To see the transcript to this video, click the “Continue Reading” button below.
Hello doctors. Hope this message finds you well and prospering today. I thank you for taking time out of your day to share with me. And what I wanted to cover in our session today is a subject that many doctors tend to stay away from because it is a part of the business management of a practice. And as we all know, chiropractors love to be passionate healers but they don’t necessarily love being the businessman or businesswoman that oversees the practice.
However, practice statistics are the road map to your new destination. If you don’t know where you’re starting it’s hard to map out a course to a new destination. So practice statistics– more than what I see a lot of times– doctors don’t even keep some the statistics I wanted to cover with you today. They just tend to know, hey, this is what I serviced, this is what I collected. And many times I find out they don’t even know what their services are, they’re just reporting what they’re taking to the bank. Very difficult to manage and oversee a practice. And when it comes down to it, you are the only person that’s going to take care of this practice. No one’s going to care about your practice, or you’re compensation or money more they you, the business owner. So it pays to know how to manage and lay out a course through practice statistics, and see what these things tell you. A lot of times it can be very enlightening and you can correct issues and problems before they ever really become one.
So let’s start out with one that’s very basic– patient visit average. Patient visit average is how long do patients stay with you? How you figure that up is you take your last three months, average out how many patient visits you’re averaging a month, then take the total number of new patients you’re seeing a month, average that over the last three months. And that’ll come out– divide new patients into patient visits and that’ll give you your PVA. That kind of tells you where are you losing them? Are you losing them at the 7th visit, the 15th visit, 25th visit?
Now the national average, believe it or not, is six. That’s not good because when your PVA is six, two things are going to happen: One, sick people will not get well. And number two is the chiropractor is going to struggle financially, unless you’re doing extreme diagnostics on the front side or selling some kind of front-loaded plan. That’s not the point, that’s not the purpose of us as chiropractors. We want to get sick people well. But that’s the national average. Now, if you just tuned me out on that, and said, well, that’s not me, my patient visit average is 26. I lay out a care plan, they tend to stay with me. But that’s not a self sustaining referral practice. Until your patient visit average is 80 or above, patients are staying with you for that long, then you’ve got room to grow. And at some point the efficiency is breaking down in the practice to have any kind of dropout rate because it doesn’t make sense. It’s easier to stay healthy than it is to get healthy. So there shouldn’t be a dropout rate. However, that’s what PVA tells you.
How about patient visit revenue versus patient visit cost? Some doctors will break down and see what their patient visit revenue is. Of course, take your total number of patient visits divided into your total average collections, and that will give you a PV revenue. At the same time, you can take your total overhead, which is minus your doctor salary if you’ve taken a salary– take your practice overhead, divide that by your total patient visits and that will give you a PVC, patient visit cost.
Now, what’s that tell you? Many times you’re working a lot harder than you need to and you’re not netting what you should. I had a situation where I was doing a practice analysis recently, and the doctor was collecting $40 a visit. Not great, not bad. It should be $50 to $60 in today’s market, on average. But the problem was when we looked at the patient visit cost, it was actually costing her $35 to see the patient. So she was netting $5.00 a visit. And I didn’t want to offend her. I said, well why don’t you just come down and practice in one of the clinics that I oversee and I’ll pay you $10 a visit. We’ll double your income. See, a lot of people just look at the revenue but you’ve got to look at the cost per visit. It costs to see that patient. It costs to keep the lights on. It costs to keep that x-ray developer running. It cost chemicals. It costs facial paper. It costs a staff to answer the phone while you’re taking care of the patient. There is a cost to every visit.
How about another statistic that’s very important. It tells you if you’re on the right road or if you’re on a road to struggles or failure. How about just case average. For every patient that comes in it should have a case average. There is a health care side of it and there’s the business side of it. Every patient should get what they need. Most doctors don’t have a problem, if a child comes in and they only need $150 to $300 worth of care, of doing that. But many doctors don’t step up and recommend the best and expect the best, and let the chips fall where they may for the patient. So, in other words, if a patient really did need $4,500 worth of care, whether they have insurance or not, we’re not recommending the best. So the case average is when you take your total collections divided by your new patients, that’s going to give you a case average for each patient.
And the key is if it’s anything less than $1,000 in today’s world, your days are numbered. You’re going to have to live off the Bank of [? Mama ?] for only for so long. You’re going to have to borrow money just to keep the doors open at that level. Now really you should be at $2,000 or higher. That doesn’t mean cookie cutter care. You recommend the best and let the chips fall where they may, and expect the best while you’re doing it.
Now insurance– we don’t care what the insurance pays. We treat the patient according to the condition that brought them and not according to the pain that they have today. If you’re going to do that, you’re going to struggle and you’re going to have a lot of ups and downs. That’s the roller coaster practice when you start doing that.
Now how about another one– referral average. What are your referrals? We all have a dream. Most chiropractors had a dream when they came out of school of having a self sustaining referral practice, but most chiropractors don’t have it. They find themselves having to go after whatever the newest gadget is, a new piece of equipment. They think they need to put in some type of weight loss into their office or the new marketing scheme to build their practice, when actually you should be able to advertise to gain and refer to maintain. It should sustain itself through a referral average.
What is your referral average? Well, there’s a formula. Can’t explain it all in a video today but I’ll give you the ins and outs of it. If you’re seeing, let’s say, 200 patient visits per month, then you should be able to expect, if the right system’s in place, and that’s key– the right foundation, the right communication with the patient, the right management throughout that patient’s care plan and time with you, which should be a long time, right? If you’re seeing 200 patient visits a month, you should be able to consistently expect– and that’s the key– expect, not wondering where’s my practice going to be next month? This month with collections were good but what’s my next month going to be like? That is not a fun way to practice. But if you have 200 patient visits a month, you should be able to expect 9, maybe 10, direct new patient referrals per month.
Now, larger practices maybe that are seeing upward to 1,000 patient visits a month, if that’s where you are, you don’t have a referral practice self sustaining, that practice should be averaging between 28 to 34 direct new patient referrals a month. That’s a good gauge of where your practice is and, more importantly, where it’s not. Because if you’re seeing 200 patient visits a month and you’re only averaging two to three new patients a month, direct referrals, then that should give you hope right now in this video. What if we were able to see that on a monthly basis– address the issues– what would happen if we added the six to seven new patients a month into your practice. And you were keeping them and your case average was about $1,800 to $2,200 a month. What would that mean? Well, it would mean thousands of dollars to your practice a month. But more importantly, you’d be getting more sick people well.
Practice statistics tell you where you are and it helps you to deter from making the wrong– as you navigate to your new route or your new destination of success it helps you to avoid the wrong turn or detours. Practice statistic analysis is not boring. It’s worthwhile and it will make a big difference in your practice.
I’ve got more to share with you. We’ll cover some more in the next sessions. But I just appreciate you taking time to share with me today. I hope you found this informative. Hope it’s useful to you. And more importantly, I hope it makes a difference in your practice. I appreciate you. God bless.