When Practices Fail: Warning Signs (and Solutions)
By Drew Stevens, PhD
Television programming has changed in recent years and, as you know, reality television is exceedingly popular. There is a fairly new show known as "Hoarders," in which individuals or couples are featured for hoarding intense amounts of household materials. The one fascinating concept from these shows is that all the individuals seem stupefied by how quickly and how intense the hoarding has become.
Unfortunately, many chiropractic practices suffer from a similar fate. Doctors and their staff leave one day and return wondering how on earth the practice suffers.
Suffice it to say, many practices fail. According to the Bureau of Labor and Statistics, 98 percent of most small businesses fail within the first five years. Just because you are a chiropractor does not mean the odds are not against you. What becomes necessary is to look for warning signs and know when to turn it around quickly.
Before I get into cause-and-effect, when I visit many chiropractic colleges and speak with the soon-to-be graduates, there is a general notion that they will never fail. Ironically, many believe their practice will be an instantaneous success and they will never go under. All chiropractors young and old will have volatility in their practice; therefore it is necessary to understand where you might have issues and how to quickly resolve them.
Poor Patient Awareness
Jeff Foxworthy, the American comic, has an act that typically begins with a round of "If this ... then that!" The same thing can be said about your chiropractic practice when it is failing. If you are beginning to see less volume in the business and your expenses are higher than your income, then you might have a huge problem. Reasons for low patient volume include, but are not limited to, poor marketing activities, lack of patient referrals and most of all, a lack of activity that creates awareness in the local community.
Chiropractors must remember that there are three types of people who aren't using their services: 1) patients have no idea who you are; 2) patients who are already with another chiropractor; and 3) patients who don't have a want or need for chiropractic care.
The latter two groups are the hardest to reach; therefore, when the practice begins to fail, the very first remedy for any chiropractic practice is to intensely begin activities that create awareness and help build brand recognition within the community. Potential activities to accomplish this include patient referral systems, networking, speaking and even writing articles in regional periodicals. The more intense you are about these activities, the more capability to bring back patients into your waiting room.
And then there are the fundamentals of all successful businesses. Are you tending to those? Let's discuss a few.
Tracking the Numbers
Many reading this article have a clear idea of how many patients you serve weekly or even monthly. However, when I engage certain chiropractors in conversation, I typically ask about expenses or even ask about account receivables; unfortunately, they often do not know the answer. And chiropractors who do not stay close to the numbers do not have a successful practice.
Chiropractic operates in one of two ways: cash or co-pay. Yet no matter what, every patient must pay for service. Unfortunately, too many chiropractors are shortsighted and see the money coming in and quickly buy material goods, forgetting to invest back into the practice or, more importantly, save for the future. The effect of not saving money or investing back into the business will deeply impact your practice for years to come.
The solution is to measure every inflow and outflow so you are close enough to the numbers and understand how to run a profitable practice. The best methods of measurement include spreadsheets that illustrate the number of patients you're seeing per week and the amount of payables and receivables. Additionally, breaking down your receivables by insurance carrier and type will help you to understand how quickly or slowly money arrives
In terms of marketing activities, you should also monitor the amount of marketing conducted each week to illustrate how those activities assist in producing more income.
Ultimately, chiropractors are best off reviewing profit and loss statements and producing sales forecasts so that the practice runs in the black.
One of the biggest challenges with any small business, including chiropractic businesses, is learning how to delegate. Chiropractic, much like any other business, especially when starting out, tends to rely on a "poor man's syndrome." In other words, many chiropractors will say they do not have money to pay for particular services. This has them treating less patients because they are busy with coding, billing, scheduling and a myriad of other responsibilities. Chiropractors can't do it all and a poor man's mentality will make the practice fail.