Many chiropractors today are seeking ways to increase revenue and reduce the costs of practice operations. In today’s post, I will share with you a few excellent ways that I have found to help curb expenditures so that there can be “more money than month.”
1. Know the costs of providing your services.
At my seminars, I am frequently asked about how to set fee schedules. Specifically, DC’s often want to or how to implement profitable “cash” or time of service fees that don’t give the farm away and are also compliant. Before any decisions can be made about how to go about this, it is vital that you knows the actual costs of providing the services you render in your practice. Any discussions made without this knowledge are meaningless as they have no context or relevance to you practice. Figure out your “Cost per patient” (or even Cost per Procedure, if you can be that specific) so that you will know exactly what each of the main procedures that you bill out cost your practice to provide. This knowledge will help steer you in the right direction to creating a profitable fee schedule and perhaps even eliminating services or procedures that are a waste of time or money.
2. Setting up a sound budget annually and review it! A budget provides a planning mechanism that forces us to monitor variations in our practice spending, but it also allows us to allocate money towards necessary elements of our business such as marketing. Once cost categories are broken down, I have found very few practices that were not able to save thousands of dollars per year! The most common item overbudget? Staffing! An expense category that frequently surprises doctors? Telephone expense. I have found lines being paid that were no longer in use by the practice, astronomical cell phone plans, and even the occasional savings be realized with some good comparison shopping.
3. Outsource, Liberate or Just Get Rid of the Dead Wood!
Although I mentioned budgeting in step two, the reality is that most cost savings in the area of comparison shopping and appropriate budgeting pale in comparison to overpaying staff. Quite frankly, some of you need to take a good hard look at your numbers and get rid of the dead wood around your practice! Employees that are overpaid and underworked are costing you far more money than you will ever save in watching your spending on pens and paper. Similarly, employees that are inefficient in their job are costing you big bucks as well. For example, if you are paying an employee to do your billing who is collecting an unacceptable percentage of your services, that employee may be doing their job, but they are not cost efficient. Why? You can outsource your billing to someone who is only paid when they collect, as opposed to your employee who is paid whether they collect well, poorly or anywhere in between. For some of these staff you need to liberate them so they can find meaningful employment elsewhere in a field in which they possess more talent or interest. For others, you may need to shift their job description towards tasks that produce a better ROI or for which they possess better skills. Finally, in this tough economy, there is absolutely no reason to tolerate and pay for any staff member who does not put 110% effort into their job, who does not play well with others or who is a thorn in your side. In virtually any market in the country, one quick trip to Craig’s List will reveal dozens of job seekers who would love to take their place and give you a bigger bang for your buck. Save your money by not trying to “save” marginal or mediocre employees. It almost never works and in the end, your time, money and effort would have been better spent on a new prospect.
3.5 Evaluate the Performance of Your Billing (For all you Jeffrey Gitomer fans, here is reason # 3.5) While it may be obvious if your front desk CA is a dud, the next questions many of you will ask is…”How can I tell if my billing person is doing their job well?” Or “How can I tell if I am spending too much money on my billing service?” Evaluating the performance of your billing staff (or service) is a hard science we were never taught in chiropractic college but can be easily learned. For starters, I would suggest you look at your Accounts Receivable and Your Collections vs Services.
For most practices, your A/R should be heavily skewed towards the Current-30 day mark and taper off towards the 60,90, and 90+ days of aging marks. If not, you may have a problem. On the other hand, your Collections should match your Services as closely as possible. Obviously, collecting 100% of services is the best, but depending on your practice mix (cash, insurance, PI, WC, etc) lower percentages may be acceptable as well. While it is difficult to give a catch-all formula that works for all practice styles, I can tell you that it is nearly impossible to be profitable if your collections percentage approximates your overhead. In other words, the average overhead for clinics is 50% and I have met doctors with 52% collections who are puzzled why they are struggling to make money. If you are in this situation (or getting too close for comfort), I suggest you contact me for assistance.
Incidentally, if you need additional information on how to meaningfully evaluate billing performance, I would recommend my program “How to Oversee Your Chiropractic Billing Staff or Service.” Sure that’s a blatant commercial, but there is no other resource that I know of in chiropractic that covers this important topic in such detail (which is why I wrote it!).
